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On March 26, 2021, the Superior Court rendered a decision dismissing a class action against the Investment Industry Regulatory Organization of Canada (“IIROC”) on the loss of personal information of thousands of Canadian investors.1 The lack of evidence of compensable injury and IIROC’s diligent behaviour are the main reasons for the dismissal of the class action. The Facts On February 22, 2013, an inspector working for IIROC forgot his laptop computer in a public place. The computer, which contained the personal information of approximately 50,000 Canadians, was never found. The information had originally been collected by various securities brokers who were under inspection by IIROC. Mr. Lamoureux, whose personal information was on the computer, brought a class action on behalf of all persons whose personal information was lost in the incident. He claimed compensatory damages for the stress, anxiety and worries associated with the loss of personal information, as well as compensation for the injury associated with the identity theft or attempted identity theft of members. He also claimed punitive damages for unlawful and intentional infringement of the right to privacy protected by the Quebec Charter of Human Rights and Freedoms. On this point, the members claimed that IIROC had been reckless and had delayed in notifying affected persons and brokers, as well as relevant authorities. Decision The class action is dismissed in its entirety. Compensatory damages The Superior Court started by acknowledging IIROC’s admission that it was at fault for the loss of the computer, and that the computer was not encrypted as it should have been to comply with IIROC policies. With respect to compensatory damages, the Court reiterated the principle according to which the existence of fault does not presume the existence of injury; each case must be analyzed on the basis of the evidence.2 In this case, the injury alleged by the members can be summarized as follows: They suffered worry, anger, stress and anxiety about the incident. They were forced to monitor their financial accounts, and in particular their credit cards and bank accounts. They were inconvenienced and wasted time in having to deal with credit agencies and ensuring that their personal information was protected. They felt shame and suffered delays caused by identity checks on their credit applications attributable to flags on their files. In its analysis, the Court held that, apart from the fact that the members were generally troubled by the loss of their personal information, there was no evidence of any particular and significant difficulties related to their mental state. Relying on Mustapha v. Culligan of Canada Ltd.,3 the Court reiterated that “the law does not recognize upset, disgust, anxiety, agitation or other mental states that fall short of injury.” If the injury is not serious and prolonged, and is limited to ordinary discomforts and fears that are inherent to life in society, it does not constitute compensable injury. In this case, the Court found that the negative feelings experienced as a result of the loss of personal information did not rise above the level of ordinary discomforts, anxieties and fears that people living in society routinely accept. Having to monitor one’s personal accounts more closely does not qualify as a compensable injury, as the courts equate this practice with that of [translation] “a reasonable person who protects their assets.”4 The Court also considered the fact that IIROC provided members with free credit monitoring and protection services. It thus concluded that, in this respect, there was no injury to compensate. Finally, the experts who were mandated to analyze the circumstances and wrongful use of the investors’ personal information found that there was no clear indication of wrongful use of the information by a person or group of persons, although evidence of wrongful use of personal information is not necessary to assert a claim. Punitive damages The plaintiff, on behalf of the members of the class action, also sought punitive damages on the grounds that IIROC had been reckless in its handling of the incident. To analyze IIROC’s diligence, the Court noted the following facts.  IIROC launched an internal investigation in the week that followed that of February 22, 2013, the date on which the computer was lost. On March 4, 2013, the investigation revealed that the computer likely contained the personal information of thousands of Canadians. IIROC filed a police report. On March 6, 2013, it mandated Deloitte to identify what personal information was lost and who were the affected persons and brokerage firms, and to help it manage the risks and obligations associated with the loss of the personal information. On March 22, 2013, Deloitte informed IIROC that the computer contained “highly sensitive” and “increased sensitivity” information about thousands of Canadian investors. On March 27, 2013, IIROC notified the Commission d’accès à l’information du Québec and the Office of the Privacy Commissioner of Canada. On April 8 and 9, 2013, IIROC met with representatives of the affected brokerage firms, and simultaneously mandated credit agencies to implement safeguards for investors and brokerage firms. IIROC also set up a bilingual call center, issued a press release about the loss of the computer and sent a letter to affected investors. The Court also accepted expert evidence according to which IIROC’s response was consistent with industry best practices, and that the measures put in place were appropriate in the circumstances and consistent with other responses to similar incidents. In light of the evidence, the Court concluded that the loss of the unencrypted laptop computer and the resulting violation of the right to privacy were isolated and unintentional. It therefore dismissed the claim for punitive damages. The outcome is that IIROC was not reckless: it rather acted in a timely manner. Comments This decision introduces a basis for analyzing the diligent conduct of a company should the personal information that it holds be compromised, and confirms that a prompt and diligent response to a security incident can safeguard against a civil suit. It also confirms that the mere loss of personal information, no matter how sensitive, is not in itself sufficient to justify financial compensation, and that it must be proven that injury was suffered. Furthermore, ordinary annoyances and temporary inconveniences do not constitute compensable injury, and monitoring financial accounts is not exceptional, but is rather considered the standard practice expected of a reasonable person protecting their assets. At the time of writing this bulletin, the time limit for appeal has not expired and the plaintiff has not announced whether he intends to appeal the judgment. Lamoureux v. Organisme canadien de réglementation du commerce des valeurs mobilières (OCRCVM), 2021 QCCS 1093. Sofio v. Organisme canadien de réglementation du commerce des valeurs mobilières (OCRCVM), 2014 QCCS 4061, paras. 21 and 22. Mustapha v. Culligan of Canada Ltd., 2008 SCC 27 [2008] 2 SCR 114. Lamoureux v. Organisme canadien de réglementation du commerce des valeurs mobilières, 2021 QCCS 1093, para. 73.

Is an event organizer responsible for an artist’s late appearance? Context is key, answers the Superior Court’s, as it dismisses the application for authorization to institute a class action against Gestion Evenko Inc.1 regarding Travis Scott’s late appearance at the Osheaga Music and Arts Festival in the summer of 2018. Overview of the first class action on this topic in Quebec. Background The Osheaga Festival, organized by the defendant, Evenko, is a huge celebration dedicated to music and visual arts where artists of all genres perform for three days on the many outdoor stages set up in Parc Jean-Drapeau on Notre-Dame Island. Rapper Travis Scott was on the lineup for the evening of August 3, 2018. His performance was scheduled from 9:45 p.m. to 10:55 p.m. on the River stage. Wishing to attend this performance, the plaintiff, who had purchased a weekend pass, went to the venue at 8:45 p.m. Unfortunately, Travis Scott was held up at customs that evening. The sequence of events can be summarized as follows. At 9:55 p.m., Evenko displayed a first message on the site’s giant screens indicating that the show was delayed for a reason beyond its control. At 10:15 p.m., Evenko broadcast a second message, both on the giant screens and on Twitter, indicating that Travis Scott had been delayed at customs and was on his way to Notre-Dame Island. At 10:30 p.m., the plaintiff left the premises; she claimed that she did not believe Evenko's messages, feared a curfew and found the crowd aggressive. At 10:40 p.m., Evenko broadcast a third message on the giant screens confirming that Travis Scott had arrived on the island. At 10:55 p.m., Evenko broadcast a fourth message announcing to festival-goers that the show was about to begin. The show started at 11:00 p.m. and ended around 11:40 p.m. An application for authorization to institute a class action was filed the next day. The plaintiff sought to represent nearly 50,000 festival-goers who, in her opinion, suffered prejudice attributable to Evenko. She claimed that Travis Scott’s 90-minute delay constituted a breach of contract by Evenko such that all members of the group should obtain a refund equivalent to the value of a daily pass. The Decision In carrying out the analysis required by section 575 of the C.C.P., Justice André Prévost concluded that the alleged facts did not appear to justify the conclusions sought. The application for authorization to institute a class action was therefore dismissed. From the outset, the Court questioned some of the allegations in the application: for example, the plaintiff’s assertion that [translation] “Travis Scott’s performance was the main consideration in the contract with Evenko” seems incompatible with the fact that she purchased a three-day pass (paras. 51, 56); similarly, there was no evidence to support her claim that the crowd was aggressive (para. 54). However, it is mainly two deficiencies in the legal syllogism that led the Court to conclude that the application for authorization did not establish an arguable case or a reasonable prospect of success (para. 66). First, the Court refused to reduce the Osheaga Festival experience to a single performance, even that of a headliner. Rather, it described the event as [translation] “a comprehensive experience [...] whose interest lies in the multiplicity and simultaneity of cultural experiences” (para. 48). In fact, in addition to the invited musical, cultural and circus artists, there are various activities, fairs, cruises and awards ceremonies, to name but a few (para. 48). The Court pointed out that all documents relating to Osheaga’s programming and schedule contain one or more of the following warnings: “Schedule and lineup subject to change” or “Artists and schedule subject to change” (para. 47). These warnings are a strong indication that such delays are far from unusual or, in the words of the Court, [translation] “this is not exceptional for those acquainted with the cultural milieu” (para. 57). In this context, Evenko cannot be found to be at fault. The Court continued its analysis, adding that, even if it were found to be at fault, which is not the case, the situation did not result in any compensable damage: Citing Sofio2 and Mustapha3, the Court pointed out that mere annoyance is not prejudice, and that, in fact, [translation] “there is no evidence that Travis Scott’s delayed performance caused a more serious inconvenience than what is usual for people attending festivals of this nature” (para. 65). In short, in the context of a multi-genre festival, an artist appearing late does not necessarily constitute compensable prejudice and does not automatically amount to the promoter’s failure to fulfil its obligations. What It Means The decision is important to the entertainment industry in that it recognizes that major event organizers sometimes deal with unforeseen circumstances and they are allowed reasonable leeway to adapt to them. Of course, each situation will be particular, but a well-informed promoter will make sure to indicate that changes are possible in its documentation. The decision also recognizes that a comprehensive cultural experience is more than the sum of its parts: a single artist appearing late does not cast a pall on the entire event. This conclusion is likely to apply to many other industries: Osheaga is a typical example of a set of distinct and simultaneous performances, but the same characterization can be given to all the rides in an amusement park or all the individual sections of a zoological garden. Our partners, Myriam Brixi and Laurence Bich-Carrière have successfully represented Evenko's interests in this case.   Le Stum c. Gestion Evenko inc., 2019 QCCS 2422. The time limit for appeal expired on July 22, 2019. Sofio c. Organisme canadien de réglementation du commerce des valeurs mobilières (OCRCVM), 2015 QCCA 1820. Mustapha v. Culligan of Canada Ltd., [2008] 2 SCR 114, 2008 SCC 27.

This publication was authored by Luc Thibaudeau, former partner of Lavery and now judge in the Civil Division of the Court of Québec, District of Longueuil. Consumer law and class action suits go well together. In the recent Girard1decision, the Quebec Court of Appeal, in an opinion by the honourable Jacques Dufresne, noted certain principles that should guide the courts of first instance in the factual analysis of a consumer law case. In so doing, the Court of Appeal is reviewing the lessons of the Supreme Court of Canada in Time2 and applying them in the context of a class action. THE ABSOLUTE PRESUMPTION OF PREJUDICE The Time decision was related to an individual recourse brought by Mr. Jean-Marc Richard on the basis of misrepresentation for an announcement by Time that he had won sweepstakes in which he had not participated. In that case, which involved a violation of the Consumer Protection Act3, the Supreme Court set out four criteria for determining whether a consumer could benefit from an absolute presumption of prejudice and, therefore, from one of the remedies provided for in section 272 of the CPA: [Official English version] that the merchant or manufacturer failed to fulfil one of the obligations imposed by Title II of the Act;  the consumer saw the representation that constituted a prohibited practice; the consumer’s seeing that representation resulted in the formation, amendment or performance of a consumer contract; a sufficient nexus existed between the content of the representation and the goods or services covered by the contract.4 The Girard case, for its part, was brought as a class action based on misrepresentations as to the calculation of a rebate offered by a provider of cable television, Internet and telephone services. Specifically, Mr. Girard criticized the service provider for not having disclosed a 1.5% fee payable to the Local Program Improvement Fund (LPIF) to its subscribers and for having miscalculated that fee.5 The Superior Court allowed the class action and ordered the service provider to pay members of the group nearly $6.5 million in compensatory damages and $1 million in punitive damages. The service provider appealed. Specifically, the judge of first instance found that she did not have to resort to the irrebuttable presumption of prejudice set out in Time, since it was clear that the consumer had suffered prejudice. For judge Dufresne, this constituted an error, but not one that justified the intervention of the Court of Appeal: [Translation] In fact, had she conducted an examination of the four criteria set out in the Time decision, she would nevertheless have concluded that the appellant should be ordered to reimburse the LPIF costs paid by its subscribers, members of the Group, beyond the actual cost of their cable television package.6 Regarding the first criterion of the analytical framework, the Court of Appeal opined that the members of the group had been victims of a business practice prohibited by the Consumer Protection Act due to the erroneous calculation of fees payable to the LPIF. Regarding the second criterion of the analytical framework, namely the awareness of the misrepresentation, judge Dufresne stressed that the members of the group had not been informed of the existence of the fees at the time the contract was made, nor of their method of calculation, the contract, as well as the invoice, being silent on this last point7. The second criterion of the Time decision was thus satisfied. We must conclude that the second criterion can be applied to an omission by the merchant, in the present case that of failing to disclose the method of calculation. The third criterion was not the subject of argument before the Court of Appeal. As for the fourth criterion —that of sufficient nexus— the service provider argued that Mr. Girard had admitted in his testimony that he would have entered into the contract even if he had known that the LPIF fees had been erroneously calculated and that the situation did not present [official English version] “sufficient nexus between the content of the representation [engaging in a prohibited business practice] and the goods or services covered by the contract”8 required by the Time decision. According to this fourth criterion, [official English version] “the prohibited practice must be one that was capable of influencing a consumer’s behaviour with respect to the formation [...] of the contract”9. Because Mr. Girard admitted that he would have entered into the contract anyway, one might think that the failure to reveal the method of calculating the LPIF would not have had any bearing on the formation of the contract. However, judge Dufresne does not hold with this argument: [72] [translation] [...] The misrepresentations, meaning the failure to disclose the method of calculation used and its repercussions, namely the act of collecting more from the respondents than the appellant itself pays to the CRTC for the LPIF, were capable of influencing their decision to contract with the appellant for its cable television services according to the terms and conditions on which they actually contracted.10 Thus, according to this excerpt, one might think that the fourth element of the analytical framework should be applied objectively. This approach stems from the Supreme Court’s use of the wording [official English version] “must be [...] capable of influencing a consumer’s behaviour”11.  The Court of Appeal suggests here that the evaluation of the fourth element of the Time analytical framework must be objective, considering in particular the wording “must be capable” used by the Supreme Court. Yet, in its decision in the Dion case rendered in 2015, another panel of the Court of Appeal adopted a subjective approach, in concreto: [85] The judge in first instance correctly applied the aforementioned to the instant case when she held that the last criterion had not been satisfied given the stipulation that the Consumers would have purchased or leased a vehicle had the charge in question been itemized or broken down. There was, accordingly, no nexus between the prohibited practice and the Consumers’ behaviour. The Consumers’ decision to pay the amount of the charge or to “perform the contract” was not influenced by the prohibited practice. Thus, there was no presumption of prejudice. 12 This question may deserve to be revisited. It is true that an objective approach benefits consumers in that it reduces their burden of proof. However, it seems that the subject of the third criterion of the Time analytical framework argues in favour of a more factual, more concrete approach. That is what is stated in the (original) English version of justice Cromwell’s reasoning in Time: “that the consumer’s seeing that representation resulted in the formation [...] of the consumer contract”13. The use of this concept of “result” suggests to the decider to proceed in a subjective manner to an analysis of the facts of the case. With respect to the fourth criterion, the English version of the decision is also telling: “a sufficient nexus existed between the content of the representation and the goods or services covered by the contract”14. This concept of “existence” also invites to proceed with a subjective analysis. Consumer law cases must be decided in accordance with the rules of civil law. This is moreover one of the lessons from Time15. A subjective approach appears more compatible with the general principles of civil law according to which a sufficient causal connection is necessary to establish the existence of a cause of action. AWARD OF PUNITIVE DAMAGES Another important aspect of the Court of Appeal’s decision on Girard is the “punitive damages” component. Remember that at the court of first instance, the first judge had granted an award of punitive damages of one million dollars in addition to a monetary award of more than six million dollars. On appeal, the Court of Appeal reduced this award to $200,000. Relying once again on the Time decision, judge Dufresne noted certain principles that must guide the court when awarding punitive damages:  [210] [Official English version] Where a court decides to award punitive damages, it must relate the facts of the case before it to the objectives that underlie such damages and ask itself how, in this particular case, awarding them would further those objectives. It must try to fix the most appropriate amount, that is, the lowest amount that would serve the purpose.16 (emphasis added). Then: [Official English version] Having regard to this objective and the objectives of the C.P.A., violations by merchants or manufacturers that are intentional, malicious or vexatious, and conduct on their part in which they display ignorance, carelessness or serious negligence with respect to their obligations and consumers’ rights under the C.P.A. may result in awards of punitive damages. However, before awarding such damages, the court must consider the whole of the merchant’s conduct at the time of and after the violations.17 Judge Dufresne recognizes that these principles argue in favour of an award of punitive damages as a remedy for the violation of the C.P.A. However, he considers the amount of one million dollars to go far beyond what is indicated by the circumstances to satisfy the objectives of the Act18. He also reiterates that the amount of punitive damages awarded, while being sufficient to serve the preventive function of the C.P.A., must be proportional to the seriousness of the alleged breaches19. However, all these factors being taken into consideration, the seriousness of the alleged breach is the most important20. On this point, judge Dufresne considers that, while not trivial, the seriousness of the C.P.A. violation should be put into perspective. He considers that the award of over six million dollars in compensatory damages carries a significant punitive effect and surely serves as a deterrent. In this sense, judge Dufresne considers that the decision of the Superior Court does not adequately assess the behaviour of the service provider before, during and after the violation of C.P.A. Even if the service provider’s defense proved to be unfounded, it did not amount to an abusive practice21. This intervention by the Court of Appeal in determining the amount of punitive damages could be characterized as exceptional. In Time, the Supreme Court recognized a certain discretion by the court of first instance in the award of -punitive damages: [Official English version] “[i]t should be borne in mind that a trial court has latitude in determining the quantum of punitive damages, provided that the amount it awards remains within rational limits in light of the specific circumstances of the case before it”22. This discretion, however, seems limited and must respect the duty of restraint of the judge who grants punitive damages. The Girard decision thus confirms the exceptional nature of the punitive damages, as recognized by the Supreme Court in Time23, and the need in consumer law for such damages to be justified in the general context of attaining the objectives of the Consumer Protection Act, namely (1) the restoration of an equilibrium in contractual relations between merchants and consumers and (2) the elimination of unfair practices that could distort the information available to the consumer and prevent him from making informed choices24. CONCLUSION The Court of Appeal’s decision in Girard will likely become the topic of much discussion. Consumer law is an area particularly conducive to class action suits and the four-part test set out in the Time decision to determine the applicability of the absolute presumption of prejudice will surely be used again by the courts in the near future. The question of whether the analytical criteria should be assessed objectively or subjectively certainly deserves to be discussed in greater depth. This question is of particular interest in the context of class actions. With respect to the "punitive damages" component of the decision, it appears that the decision in first instance is one of the rare cases where the Supreme Court accepts that an appellate court may review a first instance decision to award such damages. Justice Cromwell wrote in Time: [Official English version] “[a]n assessment will be wholly erroneous if it is established that the trial court clearly erred in exercising its discretion, that is, if the amount awarded was not rationally connected to the purposes being pursued in awarding punitive damages in the case before the court”25. Considering the Court of Appeal’s intervention in the Girard decision, we may assume that the duty of restraint of the trial judge is central to achieving this objective. The deadline for requesting permission to appeal to the Supreme Court is August 11. So this is a case to follow!   Vidéotron v. Girard, 2018 QCCA 767 (hereinafter: “Girard”). Richard v. Time, 2012 SCC 8 (hereinafter: “Time”). CQLR c. P-40.1 (the “C.P.A.”). Time, para. 124. Girard, para. 13. Girard, para. 48. Girard, paras. 65-66. Time, para. 124; Girard, para. 70. Time, para. 124; Girard, para. 70. Girard, para. 72. (emphasis is added unless indicated otherwise) Time, para. 124. Dion c. Compagnie de services de financement automobile Primus Canada, 2015 QCCA 333, para. 85. Time, para. 124 (emphasis added). ENGLISH VERSION: “that the consumer’s seeing that representation resulted in the formation [...] of [the] contract”. However, the French version reads: “la formation, la modification ou l’exécution d’un contrat de consommation subséquente à cette prise de connaissance” [translation: the formation, modification or execution of a consumer contract following that awareness] (emphasis added). Time, para. 124 (emphasis added). ENGLISH VERSION: “a sufficient nexus existed between the content of the representation and the goods or services covered by the contract”. However, the French version reads: “une proximité suffisante entre le contenu de la représentation et le bien ou le service visé par le contrat” [translation: a sufficient nexus between the content of the representation and the good or service concerned in the contract] (emphasis added). Time, para. 111. Time, paras. 210 & 215; Girard, para. 100. Time, para. 180; Girard, para. 102. Girard, para. 103 Girard, para. 105. Time, para. 190. Girard, para. 111. Time, para. 190. This is consistent with existing case law. See: Banque de Montréal v. Marcotte, [2014] 2 SCR 725, 2014 SCC 55, para. 98; Cinar Corporation v. Robinson, 2013 SCC 73, para. 134; and Dion, paras. 128-129. Time, para. 150. Time, paras. 160-161. See also: Banque de Montréal v. Marcotte, [2014] 2 SCR 725, 2014 SCC 55, para. 55. Time, para. 190.

Many Canadians travel by airline. Aside from the pleasure of travel, certain inconveniences may sometimes occur, for both air carriers and passengers alike. A class action suit is often the preferred procedural vehicle for customers to assert their rights. Recent class actions authorized by the Quebec courts raise interesting issues. The courts will be considering the application of the Convention for the Unification of Certain Rules for International Carriage by Air (the “Montreal Convention”) and of the right of passengers to claim moral damages, as well as the rates and accuracy of pricing under the Canada Transportation Act1 will be a subject of debate. Claims for moral damages Whether moral damages may be recovered pursuant to the Montreal Convention remains a thorny issue and the topic of much judicial discussion. The Court of Appeal decisions in Croteau v. Air Transat AT inc.2 and Plourde v. Service aérien FBO inc. (Sky Service F.B .O. Inc.)3 appeared to have settled the matter. In each of these cases, the Court of Appeal concluded, among other things, that the initial court judge had reason to refuse to authorize the class action with respect to the conclusions whereby class members sought compensation for psychological damage suffered during a flight. Such damage is not compensable pursuant to Article 17 of the Montreal Convention, which establishes the liability of the air carrier in the event of death or bodily injury of passengers. However, these cases did not address the matter of moral damages occasioned by a delay pursuant to Article 19 of the Montreal Convention, which stipulates that the air carrier is liable for damage occasioned by a delay. In 2012, in the matter of Yalaoui v. Air Algérie4, the Superior Court authorized a class action for the members of a group of passengers who were on a direct flight from Algiers to Montréal that had been delayed for approximately 15 hours. More specifically, the members claimed moral damages for the inconveniences occasioned by the delay, pursuant to Article 19 of the Montreal Convention. In 2017, the Superior Court5 dismissed the action on the basis that the air carrier had taken all of the reasonable measures to ensure the proper maintenance and repair of the aircraft, without being able to avoid the delay. The matter of moral damages was, therefore, not addressed. This question of awarding of moral damages recently resurfaced in Auguste v. Air Transat6. The group, composed of more than 120 passenger ticketholders, who were left in Port-au-Prince by the air carrier, received authorization to initiate a class action against the air carrier. The members of the group are claiming, pursuant to Article 19 of the Montreal Convention, moral damages occasioned by a two-day delay. In the same case, the Superior Court7 authorized in 2016 that the notices to the members, who were directed to the Haitian community, be broadcast over the airwaves of a Haitian radio station so as to reach the maximum number of persons. This method of broadcasting the notice is, at first blush, exceptional, yet the Court, using its discretion, was of the opinion that the interest of the members warranted it. The hearing is scheduled to take place in April 2018. Overcharging In 2013, in the case of Chabot v. WestJet,8 a class action was authorized against an air carrier. The members of a group allege that the carrier overcharged them for a companion seat or for a seat adapted to their condition due to a disability or surplus weight. The authorized group was composed of passengers with a functional disability and their travelling companions, which occurred on flights operated by the air carrier since December 5, 2005. The matter is of interest in that it is the result of a decision rendered by the Canadian Transportation Agency. An independent quasi-judicial tribunal and regulator, the Agency has all of the powers of a Superior Court with respect to the exercise of its jurisdiction in connection with national transportation matters. On January 10, 2008, the Agency ruled that air carriers could not demand a fee for additional seats needed to accommodate individuals having certain significant disabilities.9 Thus, in the context of the class action pending before the Superior Court, it must be determined whether the air carrier’s pricing policy is discriminatory or abusive and, if so, whether moral and punitive damages may be awarded. In connection with this same matter, the Court of Appeal10 confirmed in 2016 that the Superior Court had jurisdiction to hear the case, which is based on contractual liability and that, in so doing, it could interpret the Canada Transportation Act11, since the case does not fall within the exclusive jurisdiction of the Canadian Transportation Agency. In 2017, the Superior Court12 split the class into two groups distinguishing between domestic and international travellers. The matter is pending. Still on the subject of overcharging, the authorization to exercise a class action was granted in Choquette v. Air Canada13 for the members of a group who allege having to pay fuel surcharges when purchasing their airline tickets. As in Chabot v. WestJet,14 the Superior Court deemed competent to hear the matter, absent a legal provision granting exclusive jurisdiction to the Canadian Transportation Agency. The proceedings are also ongoing. Accuracy of Prices Finally, the matter of the Union des consommateurs v. Air Canada15 raises the question of the accuracy of the prices advertised by an air carrier. In 2014, the Court of Appeal authorized the exercise of a class action by customers who would have paid a higher price than that which was posted by the air carrier in its ads and on its website. In February 2018, notices to the attorney generals of Quebec and Canada were filed in the court record to challenge the constitutionality of the Consumer Protection Act with regards to travel tickets advertised and sold on an air carrier’s website. The case is ongoing. Several important questions in the context of class action proceedings against air carriers will be considered by the Courts. The answers could impact the rights of customers and air carriers, as well as those of their insurers.   Canada Transportation Act, S.C. 1996, c 10 Croteau v. Air Transat AT Inc., 2007 QCCA 737 Plourde v. Service aérien FBO inc. (Sky Service F.B.O. Inc), 2007 QCCA 739 Yalaoui v. Air Algérie, 2012 QCCS 1393 Yalaoui v. Air Algérie, 2017 QCCS 5479 Auguste v. Air Transat, 2015 QCCS 3923 Auguste v. Air Transat, 2016 QCCS 604 Chabot v. WestJet, 2013, QCCS 5297 Decision no 6— AT-A-2008  WestJet v. Chabot, 2016 QCCA 584; Application for leave to appeal to the Supreme Court of Canada was dismissed WestJet v. Nicole Chabot, in her quality of tutor to her minor child N.C., et al., 2016 CanLII 72704 (SCC)  Canada Transportation Act, S.C. 1996, c. 10  Chabot v. WestJet, 2017 QCCS 4942 Choquette v. Air Canada, 2017 QCCS 234 Westjet v. Chabot, 2016 QCCA 584 Union des consommateurs v. Air Canada, 2014QCCA 523  

Anyone who wants to bring an action in damages relating to the secondary securities market must prove that the action is brought in good faith and has a reasonable chance of success (s. 225.4 QSA). In Quebec,1 as elsewhere in Canada,2 no prior disclosure of evidence may be obtained by plaintiff for the purpose of meeting this burden. The procedure prescribed by the QSA is complete and sufficient, so recourse to the rules Code of Civil Procedure is unwarranted. Where such an action is brought by way of class action, the court must furthermore be convinced that the criteria for authorizing a class action are also met. The Court of Appeal does not expressly rule on whether prior disclosure is available to the investor  to sustain the proposed class action. These specific rules have no impact on the general rules regarding insurance, such as a plaintiff's direct right of action against the insurer of the person who caused the damage (art. 2501 CCQ). Regardless of the subject matter (the secondary market) or the procedural vehicle (class action), a court may order a defendant to disclose such documents which are necessary for a meaningful exercise of this right, such as insurance policies. In its recent decision in Amaya Inc. v. Derome, 2018 QCCA 120, the Court of Appeal ruled on the interaction between the Securities Act, CQLR, c.V-1.1 (QSA) and the rules specific to class actions in relation to applications by investors for prior disclosure of documents by a public issuer. We summarize here a much-anticipated decision. The Specific Framework of the QSA The QSA governs actions relating to financial markets. Although such actions may be introduced on an individual basis, class actions are regarded as the preferred vehicle, “given that publicly-traded issuers generally have many investors in like circumstances and, if something goes wrong, they are likely to come together to avail themselves of the advantages of a class action.”3 Class actions are merely one of the available vehicles, and it is in no way a requirement to use this type of proceeding. With respect to actions relating to the secondary market, section 225.4 QSA requires that any investor, whether acting personally or as representative of a proposed group, be authorized by the court before bringing the proposed action. This restriction was enacted –and similarly so across Canada–4 to preserve public confidence in stock markets,5 but also to protect public issuers against opportunistic actions brought in hopes of obtaining a settlement rather than to obtain compensation for actual damage.6 Accordingly, an investor who claims to have been defrauded will have to prove to the court from which authorization is requested that the proposed action is “in good faith and there is a reasonable possibility that it will be resolved in favour of the plaintiff” (s. 225.4 para. 3 QSA). Motions for authorization should be addressed as early as possible, so that judicial resources are allocated only to meritorious cases. Interaction With Class Actions If the action takes the form of a class action, the investor must also meet the criteria for authorization of a class action (art. 575 CCP), a burden which has been established to be a light one, since it simply involves proving that “the facts alleged appear to justify the conclusions sought” (art. 575(3) CCP).7 Not only do the QSA and the CCP impose different burdens, but the authorization they require arises at different moments in the course of the proceedings o: the authorization required by section 225.4 QSA must, necessarily, precede the authorization required by article 575 CCP. As the Court of Appeal points out: “This is eminently logical: where leave is required under the Act, there is no action upon which the class action, as a procedural vehicle, can rest until that leave is granted.”8 Of course, both issues can be disposed of in one judgment.9 With these distinctions made, it is clear that any application brought for the purpose of enabling an investor to meet the burden established by section 225.4 QSA must be analyzed pursuant to the rules set out in that provision and not the rules that generally apply to class actions.10 The judgment appealed from was therefore not a “pre-authorization class action judgment”; it was a “judgment prior to leave under the [QSA]”.11 Accordingly, it had to be reviewed in accordance with the requirements and the spirit of the QSA.12 The Judgment Under Appeal The trial judge had granted an application for documentary disclosure, relying on the parties’ general duty to cooperate set forth by article 20 of the CCP.13 He thus arrived at a solution that is unique in the Canadian legal landscape.14 Though rendered during a case management conference, the judgment under appeal  went significantly beyond the confines of case management. Accordingly, the application for leave should follow the rules applicable to judgments rendered in the course of proceedings, set out in article 31 para. 2 CCP.15 The trial judge's decision has addressed a point of law regarding to discovery, which impacted “the character of the proceedings themselves,” and which, if decided wrongly could cause irreparable harm to defendant, regardless of the expenses involved.16 Leave was granted and the Court of Appeal had to consider, on the merits, whether the trial judge was correct in applying the general principles of Quebec civil procedure to the applications for documentary disclosure that were before him. For the Code of Civil Procedure to “compensate[e] for the silence of the other laws if the context so admits,” as provided by its preliminary provision, such a silence must exist. In the opinion of the Court of Appeal, considering the purpose and history of section 225.4 QSA – in particular its goal of screening out opportunistic actions as soon as possible17 – and the uniformity of legislation on this subject in Canada,18 no such silence can be found to exist. On the contrary: in order to avoid short-circuiting the requirement for prior authorization and avoid fishing expeditions and mini-trials, judges who are responsible for authorizing actions of this nature must require that applicants meet their burden themselves.19 Neither the combination of articles 20 and 221 CCP or the specific context of class actions can sidestep that prohibition.20 Insofar as it was sought to allow the investor to meet the burden imposed by section 225.4 QSA, the application for documentary disclosure should have been dismissed. By contrast, the application to obtain disclosure of the insurance policies did not fall within the specific context of section 225.4 SA, and the trial judge's order was left undisturbed, Given the principle of cooperation (art. 20 CCP), but most importantly the long-settled principle that a third party seeking to exercise their right of action against the insurer of the person who caused the damage they suffered (art. 2501 CCQ) such applications can be justified in that they allow potential parties to the case to be identified.21 The Court of Appeal’s decision does not directly address whether class counsel may succeed in a request for “relevant evidence to be submitted” within the meaning of article 574 para. 3 CCP; such requests are traditionally considered to be properly made to contest  the application, that is, necessarily by defendant,  given that the allegations in the application for authorization to institute a class action must be assumed to be true at that stage.22 Summary Section 225.4 QSA is the expression, in Quebec law, of an intent common to all Canadian legislatures to create a screening mechanism for actions relating to the secondary market, in order to preserve investor confidence and deter frivolous suits. Accordingly, where an applicant seeks prior disclosure in order to meet the criterion for authorization set out in section 225.4 QSA, his or her application should be dismissed, including in a class action context. Where the objective of the application for prior disclosure is not one germane to the QSA, for instance, where an applicant seeks information to join an insurer to the proceedings, such application needs to be considered under the ordinary rules of Quebec law.   Theratechnologies Inc. v. 121851 Canada inc., [2015] 2 SCR 106, 2015 SCC 18 Canadian Imperial Bank of Commerce v. Green, [2015] 3 SCR 801, 2015 SCC 60 Par. 52 Par. 97 Par. 84 Paras. 49 and 84; following, inter alia, Theratechnologies Inc. v. 121851 Canada inc., [2015] 2 SCR 106, 2015 SCC 18 or Canadian Imperial Bank of Commerce v. Green, [2015] 3 SCR 801, 2015 SCC 60 Para. 50 Para. 46. Paras. 20, 46 and 54 Para. 45 Paras. 42, 45 and 55 Para. 55 Derome v. Amaya inc., 2017 QCCS 44, paras. 79 et seq. Para. 36; compare: Mask v. Silvercorp Metals Inc., 2016 ONCA 641 and Mask v. Silvercorp Metals Inc., 2014 ONSC 4161 – leave to appeal ref’d: Mask v. Silvercorp Metals, Inc., 2014 ONSC 464 (Ont. Div. Ct); Bayens v. Kinross Gold Corp., 2013 ONSC 6864; Silver v. Imax, (2009) 66 B.L.R. (4th) 222, leave to appeal ref'd, Silver v. Imax,2011 ONSC 1035 (Ont. Div. Ct) Paras. 73 to 79 Paras. 66 et seq.; leave to appeal had been referred to a panel of the Court: Amaya inc. v. Derome, 2017 QCCA 335. Paras. 49 and 84 Paras. 9 and 97 Paras. 9 and 93 Paras. 106 and 107 Collège d'enseignement général et professionnel de Jonquière (CÉGEP) v. Champagne, 1996 CanLII 4413 (CA) Benizri v. Canada Post Corporation, 2016 QCCS 454, para. 6

Year in and year out, the Superior Court of Quebec releases around 175 judgments in class actions matters, and 2017 was no exception. With two years having passed since the reform of civil procedure, the courts have had an opportunity to clarify the effect of a number of new provisions: the low threshold for authorization,1 the limited nature of a defendant's right of appeal a decision authorizing a class action,2 confirmation that certain interlocutory judgments at the authorization stage can only be appealed with leave,3 and the obligation of diligence of the first-to-file applicant4–to name just a few. Decisions on the merits have also raised questions as to the application of the absolute presumption of prejudice in consumer protection law.5 We have also seen developments in decisions relating to the enforcement of transactions, particularly in relation to the rights of the Class Action Assistance Fund to the remaining balance.6 What, then, will 2018 hold? The following is an overview of decisions to watch for this year. 1. Securities: Class Actions and Prior Disclosure On January 10, 2017, in an application under section 225.4 of the Securities Act, CQLR c. V-1.1, the Superior Court ordered defendant Amaya to disclose certain information to petitioner Derome further to an application under article 574 CCP. While the third paragraph of that article provides that the judge may allow “relevant evidence to be presented”, its first paragraph states that the application for authorization must be contested orally; accordingly, it was generally believed that a request to present relevant evidence could be made only by the defence; this was buttressed by the fact that the truth of the allegations in the application for authorization are to be assumed at that stage.7 These  arguments failed to persuade the Superior Court, which gave preference to considerations relating to the general exploratory purpose of pre-trial examinations and the obligation of cooperation that is one of the guiding principles of the new Code of Civil Procedure.8 The motion for leave to appeal was referred to the panel of the Court.9 The hearing was held on August 29, 2017, a decision can be expected in the near future. 2. Bank Fees: Class Actions and Legal Fees When may a judge deny an application to approve a transaction that has been negotiated between counsel for the class members and the defendants in a class action? In the opinion of Justice Claudine Roy, then of the Superior Court, a judge must do so when [TRANSLATION] “the result of the transactions is of very little value for the members, [even if] the defendants have succeeded in causing the plaintiff to lose interest.”10 On January 23, 2017, she refused to homologate three transactions,11 on the basis that they offered no real advantage to the members, and rather benefited class counsel, certain defendants, and certain not-for-profit organizations. She called on the courts to be vigilant in ensuring that class actions did not become [TRANSLATION] “a source of enrichment for class member counsel and a source of funding for not-for-profit organizations” and suggested that in that case, a discontinuance was more in keeping with the rules of fairness and the objective of class actions.12 A few days later, her then colleague, Justice Denis Jacques, adopted her comments and also refused to homologate a transaction in a related case.13 On March 31, 2017, Justice Marie Saint-Pierre of the Court of Appeal confirmed that the refusal by a judge of the Superior Court to authorize a transaction could be appealed, but only with leave: unlike a judgment homologating a transaction, a judgment refusing to do so does not terminate the proceedings, and, accordingly, following the ordinary rule pertaining to interlocutory judgements, it may be appealed only with leave.14 Leave was however granted in both cases. The appeal was heard on September 1, 2017, and decision was taken under advisement. A decision should be released in early 2018 that will provide guidelines for a judge exercising the power to review transactions. 3. Motor Vehicles: Class Actions and Interpretation of a Settlement The automotive world was astounded on September 18, 2015, when it was revealed that Volkswagen had installed surreptitious software in some of its diesel-powered vehicles to falsify the results of environmental compliance tests done by government agencies. Numerous class actions were instituted, including, in Canada, one in Quebec and another in Ontario. After lengthy talks, the parties reached a comprehensive agreement regarding certain categories of vehicle, which agreement was endorsed by the Superior Courts of Quebec15 and Ontario.16 The agreement included a provision that some owners would be eligible for a refund in the event that certain “fixes” were not available by June 15, 2017. On June 15, 2017, the fixes had received all of the necessary regulatory approvals, but had not yet been put on the market, and a dispute ensued as to whether the refund was available. Motions for interpretation of the settlement were filed in both jurisdictions. In Quebec, the Court concluded that the “availability” contemplated in the settlement agreement had to be understood to mean availability of the fix itself and that approval by the authorities before the deadline was not sufficient to defeat the obligation to refund. The Court noted that a transaction of this scope is necessarily a delicate compromise, the terms and deadlines for which were deliberately chosen over the course of numerous talks,17 and also pointed out that the opposite interpretation assumed that the agreement did not contain an implementation date and would leave performance to the whim of the defendants,18 which seemed hardly compatible with the spirit of a settlement. However, its Ontario counterpart came to precisely the reverse conclusion: the refund is dependent on the availability of the fixes, so that without them, the refund clause cannot apply. This said even if the agreement does not mention a specific deadline for performance, defendants are required to implement it diligently, having regard to the good faith performance obligation clause.19 The Quebec Court of Appeal is to hear the appeal on February 2, 2018,20 and the Ontario Court of Appeal will do so shortly thereafter. 4. Investments: Class Actions and Plans of Arrangement On November 30, 2015, the Superior Court authorized a class action instituted against certain entities in the Desjardins Group relating to risky investments, including some in connection with asset-based commercial paper21 (“ABCP”). The ABCPs had already been the subject of a plan of arrangement filed with and approved by the Ontario Superior Court of Justice under the Companies’ Creditors Arrangements Act, RSC 1985, c. C-36 and an injunction. The defendants therefore applied to the Superior Court to strike out the conclusions in the class action proceedings relating to the ABCPs. The Court ruled that the motion was premature and that further evidence would be required before it could conclude the allegations were aimed at matters fully covered by the plan of arrangement..22 Since the matter involved a question of jurisdiction – what is more, a novel one –, the Court of Appeal agreed to consider the matter,23 and it is to be heard on February 9, 2018. 5. Noise Pollution: Class Actions and Constitutional Law Factory discharges, highway dust, and noise pollution: the number of class actions based on neighbourhood disturbances continues to rise in the wake of the decision in St. Lawrence Ciment.24 Two such cases should be watched this year, since they involve not only the principle of the free enjoyment of a person’s property, guaranteed by the Civil Code and the Quebec Charter, but also the broad rules governing the division of constitutional powers between the federal and provincial governments. Because aviation falls within the exclusive jurisdiction of Parliament, companies operating in that field are considered to be more or less immune to provincial legislation interfering with the conduct of their business. It remains to be determined whether interjurisdictional immunity, as the doctrine is known, is sufficient to defeat a class action alleging excessive noise pollution. Interjurisdictional immunities were argued at the November 20-21, 2017 authorization hearing in the action instituted by Les Pollués de Montréal-Trudeau against the operator of the Trudeau airport. Justice Chantal Tremblay may acceded to the submission –and deny the authorization– or refer the issue for determination on the merit, if she is of the view, for instance, that the evidence is currently insufficient for a decision. However, the argument should find a definitive answer by the end of the year, since a five-week trial is to begin in February in the action instituted by the Coalition contre le bruit against the operators of the airfield at Lac-à-la-Tortue in Mauricie. Lavery was retained in this matter after  the judgment granting authorization.25 6. Retail Commerce: Class Actions and Consumer Law Between 2007 and 2011, Leon’s Furniture advertised to customers that they could [TRANSLATION] “pay nothing for 15 months”. Some of the purchase financing programs, however, involved paying annual administrative fees. On July 31, 2017, the Superior Court found Leon’s liable and ordered the company to pay almost two million dollars to consumers,26 stating in passing that assessing the quantum of compensatory damages a discretionary exercise. While the decision relies on the Supreme Court's decision in Time, specificallythe passages dealing with the irrebuttable presumption of prejudice resulting from a violation of the Consumer Protection Act, CQLR, c. P-40.1 [CPA]27, it seems to run counter to a decision of the Court of Appeal rendered barely two months earlier,28 which many took to hold that, even in the class action context, it is up to a consumer who wishes to obtain compensatory damages to prove the alleged prejudice and that it was caused by the merchant’s violation of the CPA. Although the Superior Court’s decision squarely serves the remedial and protective objectives of the CPA, it raises a number of questions regarding the applicability of the general rules of civil law to consumer protection cases, especially  as they relate to awards of compensatory damages. We commented on those decisions earlier here. The appeal is expected to be heard at the end of 2018.   Asselin v. Desjardins Cabinet de services financiers inc., 2017 QCCA 1673; Ameublements Tanguay inc. v. Cantin, 2017 QCCA 1330 (leave to appeal requested); Pfizer inc. v. Sifneos, 2017 QCCA 1050. Groupe Jean Coutu (PJC) inc. v. Sopropharm, 2017 QCCA 1883; Trottier v. Canadian Malartic Mine, 2017 QCCA 119. Groupe Jean Coutu (PJC) inc. v. Sopropharm, 2017 QCCA 1883. Cohen v. Option Consommateurs, 2017 QCCA 94 and Badamshin v. Option Consommateurs, 2017 QCCA 95 (leave to appeal to the Supreme Court denied: SCC No. 37521 (July 16, 2017). Vidéotron v. Union des consommateurs, 2017 QCCA 738; Option Consommateurs v. Meubles Léon ltée, 2017 QCCS 3526. Handicap-Vie-Dignité v. Résidence St-Charles-Borromée, CHSLD Centre-ville de Montréal, 2017 QCCS 935 (costs of publication and remaining balance); Halfon v. Moose International Inc., 2017 QCCS 4300 (right to remaining balance where payment is in nature). Derome v. Amaya inc., 2017 QCCS 44. Derome v. Amaya inc., 2017 QCCS 44, paras. 41-53. Amaya inc. v. Derome, 2017 QCCA 335. Option Consommateurs v. Banque Amex du Canada, 2017 QCCS 200, para. 65. Option Consommateurs v. Banque Amex du Canada, 2017 QCCS 200. Option Consommateurs v. Banque Amex du Canada, 2017 QCCS 200, para. 110. Option Consommateurs v. Banque Canadienne Impériale de Commerce, 2017 QCCS 275. Option Consommateurs v. Banque Amex du Canada, 2017 QCCA 502. Option Consommateurs v. Volkswagen Group Canada Inc., 2017 QCCS 1411. Quenneville v. Volkswagen, 2017 ONSC 2448. Option Consommateurs v. Volkswagen Group Canada Inc., 2017 QCCS 2870, par. 22. Option Consommateurs v. Volkswagen Group Canada Inc., 2017 QCCS 2870, par. 39. Quenneville v. Volkswagen, 2017 ONSC 4583. Authorization granted: Volkswagen Group Canada Inc. v. Option Consommateurs, 2017 QCCA 1361. Dupuis v. Desjardins Sécurité financière, compagnie d'assurance-vie, 2015 QCCS 5828. Dupuis v. Desjardins Sécurité financière, compagnie d’assurance-vie, 2016 QCCS 6348. Desjardins Sécurité financière, compagnie d'assurance-vie v. Dupuis, 2017 QCCA 802. St. Lawrence Cement Inc. v. Barrette, [2008] 3 SCR 392, 2008 SCC 64. Authorization granted: Coalition contre le bruit v. Shawinigan (Ville de), 2012 QCCS 4142. Option Consommateurs v. Meubles Léon ltée, 2017 QCCS 3526. Richard v. Time Inc., [2012] 1 RCS 265, 2012 CSC 8, par. 123. Vidéotron v. Union des consommateurs, 2017 QCCA 738.

Lavery recently attended the Strictly Automotive Seminar organised by the Defence Research Institute in Detroit, Michigan. The seminar addressed legal issues which the automotive industry is currently facing worldwide. This newsletter provides an overview of the legal principles vehicle manufacturers and dealers should consider when carrying on business in Québec. All transactions involving consumers in Québec are governed by the Consumer Protection Act  (“CPA”)1. The CPA covers several aspects of the activities of automotive manufacturers and dealers, including but not limited to warranties, credit contracts, advertising and price posting. Warranties The CPA sets out several legal warranties in favour of consumers which dealers, manufacturers and intermediaries are required to provide.2 The two main legal warranties are: (1) the warranty of fitness for purpose3 (goods must be fit for the purpose for which goods of that kind are ordinarily used) and (2) the warranty of durability4 (goods must be durable in normal use for a reasonable length of time, having regard to their price, the terms of the contract and the conditions of their use).5 These warranties result in a lower burden of proof being imposed on consumers. Once a consumer has shown a deficit of use or lack of durability, the dealer or manufacturer has the burden of proving that there is no latent defect, that the defect results from improper use by the consumer, that the defect was known by the consumer at the time of purchase or that the lack of durability is the result of normal wear and tear. Contracts of credit The form and content of contracts of credit (as well as statements of account) are strictly regulated by the CPA.6 The main obligations of merchants who enter into credit contracts are: (1) the obligation to fully disclose credit charges and the credit rate; (2) the prohibition against charging fees not disclosed in the contract; and (3) the proper computation of the credit rate. The CPA also governs advertising about credit, imposing strict disclosure obligations.7 To ensure compliance with the duties prescribed by the CPA, dealers and manufacturers must carefully follow these requirements. Over the years, the credit industry has had to defend several class actions, many of them involving the disclosure requirements for credit contracts.8 The Québec Legislature has been planning to modernize the CPA provisions about credit contracts for many years. The Québec National Assembly is currently working on Bill 134, An Act mainly to modernize rules relating to consumer credit and to regulate debt settlement service contracts, high-cost credit contracts and loyalty programs9. Bill 134 contains measures which, if adopted, will allow consumers to take action against credit providers and rely on legal and conventional warranties against them.10 At the time of writing, Bill 134 is undergoing final “section by section” reading and therefore, should be passed shortly. We will discuss these new measures in an upcoming bulletin. Advertising A complete chapter of the CPA covers business practices, including advertising.11 These practices include: the prohibition against making false or misleading representations to consumers generally12 or regarding the benefits or other attributes ascribed to goods or services,13 the merchant’s identity,14 the rebates or premiums offered,15 the nature of the transaction16 and the price of the goods or services.17 Failing to mention an important fact in commercial advertising or a representation is also prohibited.18 These prohibited business practices are similar to what constitutes deceptive advertising practices in common law jurisdictions. The standard of analysis for the determination of deceptive practices is applied from the perspective of the average, inexperienced and credulous consumer.19 The CPA provides that such use of a prohibited practice creates a presumption that, had the consumer been aware of such practice, he would not have agreed to the contract or would not have paid such a high price.20 In the landmark decision Richard v. Time, the Supreme Court of Canada held that the use of a prohibited practice such as false or misleading advertising creates an absolute presumption of prejudice in favour of the consumer if (1) the merchant or manufacturer failed to fulfil an obligation imposed by the CPA; (2) the consumer saw the representation that constituted a prohibited practice; (3) this resulted in the formation, amendment or performance of a consumer contract; and (4) a sufficient nexus exists between the content of the representation and the goods or services covered by the contract. Where these four requirements are met, the court can conclude that “the prohibited practice is deemed to have had a fraudulent effect on the consumer”. In such a case, the contract so formed, amended or performed constitutes, in itself, a prejudice suffered by the consumer”.21 There is a strong relationship between the CPA provisions governing warranties and those governing prohibited business practices. Although both address commercial representations, they provide for different remedies. For example, failing to disclose a latent defect known to a manufacturer can trigger liability based on not only legal warranty but also the failure to mention an important fact in a representation made to a consumer. Advertising regarding autonomous vehicles will be an interesting issue within the next few years. Before launching an advertising campaign for this type of vehicle, section 220 a) of the CPA will have to be considered. This provision prohibits a manufacturer from falsely, by any means whatsoever, ascribing certain special advantages to goods or services in advertising. Additionally, because of the novelty effect of these vehicles, merchants will have to be very careful not to fail to mention an important fact regarding their use.22 Prices The CPA contains strict rules regarding price posting and labelling. It provides that no merchant may claim fees from a consumer unless the amount thereof is clearly indicated in the contract.23 This includes credit contracts and leasing contracts. As a corollary to the provisions regarding the display of price, the CPA states that merchants may not charge a higher price for goods or services than advertised.24 The courts have been relatively strict in applying these provisions, leaving little room for error in prices and ruling that an error in price is not an excuse.25 Merchants must be very diligent in advertising or disclosing prices and fees, as several class action proceedings in Québec have been based on the failure to disclose fees or other charges in contracts.26 Conclusion Manufacturers and dealers in the automotive industry must pay particular attention to the provisions of the CPA. If the manufacturer or dealer fails to fulfil an obligation imposed on him by the CPA, the consumer may demand, without prejudice to other remedies, the specific performance of the obligation (for instance, the repair of the product, the replacement of defective parts or to carry out maintenance work), that his obligations be reduced or that the contract be rescinded, set aside or annulled. The consumer may also claim punitive damages.27 Furthermore, the CPA contains penal provisions which could vary to a fine of $2,000 to $100,000.28 The range of legal issues facing players in the automotive industry is growing exponentially and showing no sign of slowing down. Indeed, a substantial number of cases and class actions have been instituted against businesses involved in this sector notably for product liability and prohibited business practices. The best way to prevent such claims is to take preventive action to avoid non–compliance with the CPA.   Consumer Protection Act, P-40.1. Sections 53 & 54 CPA. Section 37 CPA. Section 38 CPA. The CPA also provides a warranty for the availability of parts and repair services: Section 39 CPA. Division III, Sections 66-150 CPA. Sections 243, 244 & 247 CPA. For example: Dion v. Compagnie de services de financement automobile Primus Canada, 2015 QCCA 333; Pilon v. Mazda Canada inc., 2013 QCCS 748; Thibert v. Hyundai Motor America, 2013 QCCS 744, Bourgeois v. Ford du Canada ltée, 2013 QCCS 745; Contat v. General Motors du Canada ltée, 2009 QCCA 1699. National Assembly, Bill 134. Section 103.1 suggested by Section 19 of Bill 134. Title II, Sections 215-253 CPA. Section 219 CPA Sections 220 & 221 CPA. Section 242 CPA Sections 231 & 232 CPA. Section 229 CPA. Section 224 c) CPA. Section 228 CPA. Section 218-219 CPA; See also Richard c. Time Inc. 2012 CSC 8. Section 253 CPA Richard c. Time Inc. et at 2012 CSC 8, par. 124. Section 228 CPA Section 12 CPA. Section 224 c) CPA See Boutin v. 9151-8100 Québec inc. (St-Basile Toyota), 2016 QCCQ 5282; Ouellet v. Charest Expert inc., 2010 QCCQ 11313; Vermeulen v. Marine Nor Sport inc., 2015 QCCQ 926; Comtois v. Vacances Sunwing inc., 2015 QCCQ 2684. Bank of Montreal v. Marcotte, [2014] 2 SCR 725, 2014 SCC 55 (CanLII); Dion v. Compagnie de services de financement automobile Primus Canada, 2015 QCCA 333; Pilon v. Mazda Canada inc., 2013 QCCS 748; Thibert v. Hyundai Motor America, 2013 QCCS 744; Bourgeois V. Ford du Canada ltée, 2013 QCCS 745; Contat v. General Motors du Canada ltée, 2009 QCCA 1699. Section 272 CPA. Articles 277, 278 CPA.

Over half of the applications for authorization to institute class actions filed in Québec since the beginning of 2017 are based on consumer law. There is no doubt that consumer class actions will continue to fuel discussions within the business and legal communities. We will continue to monitor the situation closely. Two current issues have been identified: Does a consumer claiming moral damages in a class action have to prove injury and a causal connection between such injury and the merchant’s alleged breach? At present, two trends appear to be developing. Vidéotron c. Union des consommateurs1 appeared to have provided the answer. In that class action, the Court of Appeal of Québec affirmed that in order to be entitled to damages under general law, a consumer must establish injury and the causal connection between that prejudice and the merchant’s contravention of the Consumer Protection Act. Recently, however, the Superior Court of Québec in Option consommateurs c. Meubles Léon2 held that the quantum of damages could be left to the court’s discretion. The Superior Court thereby departed from the Court of Appeal’s decision in Vidéotron , believing that it was instead bound by the teachings of the Supreme Court of Canada in Richard v. Time,3 a decision that was not rendered during a class action. Relying on the Supreme Court’s ruling in Time, the Superior Court reiterated that the consumer benefits from an absolute presumption of prejudice once it is established that a prohibited practice occurred. Adopting a pragmatic approach, the Superior Court inferred that where there was a prejudice to some group members, that same prejudice was suffered by the group as a whole. The Court, therefore, awarded each group member $100 for moral damages after hearing certain group members testify that they were angry and frustrated about the false or misleading advertising by Leon’s Furniture. In light of this decision, the courts could systematically award moral damages to every member where some consumers testify that they were frustrated by a merchant’s prohibited practice. Such an approach would certainly simplify the requirements on the burden of presenting evidence to establish such an injury. Note, however, that Leon’s Furniture is appealing the Superior Court decision notably on the ground that the Court erred in awarding $100 for moral damages to the group members. The Court of Appeal will therefore have the opportunity to clarify its rulings. Should the group representative be examined under article 574 C.C.P. in order to determine the representative’s capacity to properly represent the group? Since the Court of Appeal of Québec decisions in Sibiga4 and Boiron,5 it seems clear that at the authorization stage, the courts will take a flexible, broad approach to the criteria in article 575 C.C.P. with respect to the representative’s ability to properly represent the group members. Indeed, the court should find that the minimum requirements have been satisfied where the representative understands i) the allegations in the application for authorization and ii) that other consumers may also have suffered similar prejudice. However, while the facts alleged by the plaintiff must be assumed to be true at the authorization stage, the Superior Court recently provided some guidance as to the circumstances that would justify introducing evidence and examining the proposed representative in order to determine his ability to properly represent the group members6. In Mahmoud, the Superior Court allowed the defendant to examine the plaintiff on the steps undertaken to ascertain the composition of the group members aside from consulting his lawyers and what he had done to verify the extent and size of the proposed group. The Court noted the absence of any allegations on these subjects and held that the questions were relevant to determining whether to apply the rules for mandates to take part in judicial proceedings on behalf of others or for consolidation of proceedings under article 575(3) C.C.P. The Court added that these questions were also relevant to determining whether the plaintiff was in a position to properly represent the interests of group members. Several months earlier, the Superior Court arrived at the same conclusion on examining the representative under article 574 C.C.P.7. The Court held that allegations akin to legal conclusions concerning the representative’s ability cannot satisfy the requirements of article 575(4) C.C.P. As a result, the Court found that the examination of the representative would be an efficient means of verifying the criteria of article 575 C.C.P. in a useful and judicious manner to shed light on some of the allegations of the motion for authorization that may be incorrect or incomplete. Consumer law and class actions are two areas of law that have been rapidly developing in recent years, which is why the courts are faced with issues which cannot be definitively answered by the Superior Courts. During the coming months, it will be interesting to see which approach the courts adopt on awarding damages and where applicable, moral damages. It will also be necessary to see whether the Superior Court will re-examine the criterion on adequate representation by allowing defendants to examine and verify the suitability of representatives.   2017 QCCA 738. 2017 QCCS 3526. 2012 CSC 8. Sibiga c. Fido Solutions, 2016 QCCA 1299. Charles c. Boiron, 2016 QCCA 1716. Mahmoud c. Société des casinos du Québec inc., 2017 QCCS 1691. Michaud c. Sanofi-Aventis Canada inc., 2016 QCCS 3977.

On November 22, 2016, the Québec Court of Appeal issued an unprecedented judgment on the application of article 578 of the New Code of Civil Procedure (“NCCP”) in the following cases: DuProprio inc. v. La Fédération des chambres immobilières du Québec, Énergie éolienne Des Moulins S.E.C. v. Labranche and La Centrale des syndicats du Québec c. Allen.1 In a judgment, written by Justice Jacques Chamberland, the Court of Appeal unanimously dismissed the defendants’ applications for leave to appeal the judgments rendered in first instance authorizing the institution of the class actions. Given that article 578 is a new provision, the Court of Appeal joined these three cases for the purposes of the hearing and referred the issue to a panel of three judges. History of the right to appeal Firstly, Justice Chamberland provided an outline of the legislative history of the right to appeal a judgment authorizing the institution of a class action. Introduced in 1978, the class action provisions at the time permitted both the plaintiff and the defendant to appeal the judgment authorizing the institution of the class action. In 1982, the legislator instituted an asymmetric right to appeal, doing away with the defendant’s right to appeal at the authorization stage while retaining the plaintiff’s right to appeal a judgment denying authorization. During the recent reform that resulted in the NCCP, which came into effect on January 1, 2016, the legislator enacted section 578 NCCP, which henceforth permits the appeal, by leave, of judgments granting an application for authorization to institute a class action. However, the legislator did not specify the criteria required to grant such leave. The standard for intervention The Court states that the standard for intervening on the appeal of a decision granting or dismissing an application to institute a class action is [translation] “stringent”. The Court of Appeal will intervene only if the first instance judge committed an error in law or manifestly erred in his or her assessment of the four criteria governing the authorization of the action.2 The applicable test Relying on the Minister of Justice’s commentary which states that [translation] “the appeal of the authorization should only deal with the conditions for granting it”, Justice Chamberland explained that [translation] “the test should not be so severe that it sterilizes the right to appeal on leave, nor so supple that it places both parties on the same footing with respect to the right to appeal”. In defining the applicable test, the Court considered the fact that the threshold required to obtain authorization to institute a class action is low and that the judge has [translation] “broad discretion” to grant such a motion. Thus, the Court stated that the test must be “stringent” and appeals must be reserved for [translation] “exceptional cases”: The judge will grant leave to appeal where the judgment appears to have an overriding error on its very face concerning the interpretation of the conditions for instituting the class action or the assessment of the facts relating to those conditions, or, further, where it is a flagrant case of incompetence of the Superior Court.3 According to the Court, this test respects the intention of the legislator particularly as it: i) deals only with the conditions for exercising the class action, ii) excludes appeals that are unnecessary or that only address incidental matters, iii) respects the discretion of the first instance judge, iv) does not increase the burden to be met by the plaintiff for instituting a class action, and v) avoids a long and costly debate on the merits where the class action is ill-founded. Conclusion Applying the aforementioned test to the specific facts of each of the cases, the Court of Appeal dismissed all the applications for leave to appeal the judgments authorizing the institution of the class actions, with costs against the appellants. Comments This decision once again demonstrates the liberal approach adopted by the courts, which imposes a low threshold for obtaining authorization to institute a class action. The recent obiter of Justice Bich4 in which she invites the legislator to reconsider the usefulness of the authorization stage in its current form is just a further reflection of this more liberal approach. There is reason to question the real benefits of limiting the right to appeal the judgment authorizing the institution of a class action in such a manner. Indeed, a true filtering mechanism with a right to appeal at the authorization stage would allow the plaintiff to get a good feel, at a preliminary stage, of the viability of his claim before devoting time and money to same. He therefore risks being deprived of the Court of Appeal’s insights on the pitfalls and obstacles that could compromise the success of the action later on. Furthermore, a judgment of the Court of Appeal confirming the authorization of the class action can serve as a strong argument in favour of negotiating a settlement, thereby avoiding the expenses and waste of judicial resources resulting from a trial on the merits. The Court file numbers are: DuProprio: (500-09-026070-169); Énergie éolienne Des Moulins: (200-09-009270-163 and 200-09-009273-167); and CSQ: (200-09-009238-160), (200-09-009241-164) and (200-09-009247-161). Art. 575 C.C.P. At para. 59 of the decision. Charles v. Boiron Canada inc., 2016 QCCA 1716 (CanLII).

On August 10, 2016, the Québec Court of Appeal authorized a class action pertaining to international roaming fees, thus reiterating, with renewed respect for the opposing view, that meeting the authorization threshold and the criteria respecting the representative’s interest is fairly easy under Quebec law.1 The proposed class action After having incurred “disagreeably surprising”2 roaming fees during a trip to the US, Inga Sibiga, a Quebec consumer who has a wireless telephone contract with Fido (a subsidiary of Rogers), seeks the authorization to institute a class action against Bell, Fido, Rogers and Telus, the four major wireless service providers in Canada. In essence, she claims that the international roaming fees charged by those companies to Quebec consumers are abusive, lesionary and so disproportionately high as to amount to exploitation, contrary to section 8 of the Consumer Protection Act3 and article 1437 of the Civil Code of Québec. Ms Sibiga asks for the reduction of the obligation of subscribers and punitive damages. International data roaming allows a consumer to use a mobile phone out of the area served by his or her provider, the latter resorting to another provider’s network, at a set tariff. Since all defendants offer national coverage, roaming charges only become an issue in respect of data transmission abroad. The decision under appeal On July 2, 2014, the honourable Michel Yergeau of the Superior Court of Québec dismisses the motion for authorization with costs. The Superior Court essentially finds that Ms Sibiga does not appear to have satisfied the requirement of the then-applicable article 1003(b) CCP as the facts alleged in her motion are not sufficient to justify the conclusions sought. Justice Yergeau notes that the motion contains no allegation or document establishing the framework of the contractual obligations assumed by the petitioner and by her service provider.4 Specifically, he scolds the petitioner for having failed to produce a copy of her contract with Fido, a contract which he characterizes as an “essential tangible fact”.5In view of this rather poor evidence, it appears to the Court that the allegations as to the exploitative nature of the roaming fees are mere speculations and not facts sufficient to justify authorizing a class action. Expressing an oft-heard concern, the Superior Court insists that it is not its role “to embark on the equivalent of a public inquiry” as called for by the motion.6As liberal as Infineon suggests the screening mechanism at the authorization stage should be,7“[o]ne does not launch court proceedings as expensive for the judicial system as a class action on such a tenuous base.”8 Adding to this decided conclusion, the Superior Court further expresses the view that Ms Sibiga is not in a position to adequately represent the members of the class, as required by article 1003(d) CCP. This is in part because she does not have the required standing within the meaning of article 55 CCP, at least against Telus and Bell since she is bound by contract only with Fido (and thus Rogers). This is also because, having only a minimal understanding of the class action process and no control whatsoever over the proceedings, she appears to be no more than a pawn of her attorneys.9 Without blaming Ms Sibiga or her lawyers, the Superior Court insists on the independence of the “representative” in a class action. Ms Sibiga’s appeal would be allowed, the honourable Nicholas Kasirer writing for the Court of Appeal. The “social dimension” of class actions, emphasized by the most recent Supreme Court decisions, is the rock against which the Superior Court’s decision is quashed.10 Appeal Although concurring with the concerns expressed by the Superior Court that “a lax approach to the standard can result in authorization of class actions that do not deserve to go to trial”,11the Court of Appeal is of the view that it erred: “while a judge can refuse a motion for authorization that relies on an overly liberal interpretation of the Infineon standard, it is a mistake in law to refuse authorization by treating that standard as overly liberal in itself.”12 In the Court of Appeal’s opinion, “by denying authorization […] based on what he described as an imprecise and speculative claim, the motion judge neglected to apply the prima facie case standard relevant to this consumer class action”13 and thus failed to see the threshold for authorization was met. The unbearable lightness of the authorization filter “The action should be allowed to proceed if the applicant has an arguable case,”14 “the court’s role is merely to filter out frivolous motions”15: article 1003 CCP sets a low threshold, despite proposals for a more interrogative approach. Indeed, a scintilla of credibility suffices at this stage: it is at the trial on the merits that allegations should be substantiated, supported by the evidence. The motion judge, says the Court of Appeal, should not have asked for more. In other respects, perhaps paradoxically, the Court of Appeal finds that it was “imprudent and indeed mistaken”16 for the Superior Court to engage with the motion and its supporting evidence on the merits, as the authorization calls for a consideration of the surface of the evidence.17 What is more, the Court of Appeal is less convinced than the Superior Court that it is necessary that Ms Sibiga’s contract be filed in the court record. Since the existence of a contractual relation is not disputed, the Court of Appeal considers that, at the authorization stage, the filing of the monthly statements from the service provider and some publicly available information documents should be considered sufficient.18 The representative is neither a puppet nor a spearhead As to the petitioner’s representative capacity, in line with the Marcotte19 decision of the Supreme Court (which was unavailable to the Superior Court for it was under advisement the time), the Court of Appeal concludes that the absence of a direct cause of action (here, in contract) with two of the proposed defendants should not constitute an insurmountable obstacle to a class action.20 The issue of the role and capacity of the petitioner to work with –rather than for– her attorneys proves a more delicate one: although excesses have been known to occur, entrepreneurial lawyering is not itself a bar to finding that the designated representative has the requisite interest in the suit.21 The genuineness of a motion is not wholly discredited merely because the proceedings bear the lawyer’s scent.22 Here too, the Court of Appeal finds that the Superior Court failed to apply the liberal standard warranted by the Supreme Court. The class description: the burden of proof belongs to the brave Building on a comment of the Superior Court to the effect that, absent any detail concerning many of the countries where roaming costs could allegedly have been incurred or the variety of the mobile plans involved, the proposed class was unduly inclusive, defendants Bell and Telus had asked that, should the appeal be allowed, the class be restricted.23 The Court of Appeal declines to make such a ruling. As tempting as it might be to bring the proposed class to more common proportions, doing so would amount to prejudging the ability of the applicant to conduct her case.24 Again, at the authorization stage, it suffices to establish an arguable case, and this burden was met by petitioner.25 In any event, class definition can be reviewed by the court at the trial on common issues.26 Conclusion The decision of the Québec Court of Appeal falls in line with the most recent decisions of the Supreme Court of Canada relating to class actions. The decision is not one for jurisprudential controversy; it rather serves to show how emphatically the highest court in the land has diluted the threshold for authorization in Quebec.27 Authorization is, of course, not a mere formality, a call for rubber-stamping, but it is not fatal for the evidence presented at this preliminary stage to be incomplete or imprecise. The criteria for authorization have been substantively untouched by Québec’s civil procedure reform, there is every reason to believe that there is a bright future for this liberal approach. Sibiga c. Fido Solutions inc., 2016 QCCA 1299 [CA], inf. Sibiga c. Fido Solutions inc., 2014 QCCS 3235 [SC]. CA, at para. 18. Consumer Protection Act, CQLR c P-40.1. SC, at para. 113. SC, at para. 109 [our translation]. CA, at para. 131; SC, at para. 121. SC, at para. 147, reference made to Infineon Technologies AG v. Option consommateurs, [2013] 3 SCR 600, 2013 SCC 59. SC, 98 [our translation]. SC, at paras. 148-155. CA, at para. 51, reference made to Bisaillon v. Concordia University, [2006] 1 SCR 666, 2006 SCC 19, at para. 19. CA, at para. 14. CA, at para. 15. CA, at para. 15. Infineon Technologies AG v. Option consommateurs, [2013] 3 SCR 600, 2013 SCC 59, at para. 65. Ibid., at para. 61. CA, at para. 96. CA, at paras. 69-96. CA, at paras. 56-68. Bank of Montreal v. Marcotte, [2014] 2 SCR 725, 2014 SCC 55. CA, at paras. 39, 98, 115. CA, at paras. 102-103. CA, at para. 104. CS, at para. 122. CA, at paras. 140-141. CA, at paras. 137-138. CA, at para. 150. See e.g., Infineon Technologies AG v. Option consommateurs, [2013] 3 SCR 600, 2013 SCC 59; Vivendi Canada Inc. v. Dell’Aniello, [2014] 1 SCR 3, 2014 SCC 1; Bank of Montreal v. Marcotte, [2014] 2 SCR 725, 2014 SCC 55; Theratechnologies Inc. v. 121851 Canada Inc., [2015] 2 SCR 106, 2015 SCC 18.

 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 is closely monitoring developments in consumer class actions and, in order to keep the business sector informed on the subject, publishes regular newsletters on recent case law and legislative changes that are likely to affect, if not transform, business practices. INTRODUCTION In Fortin v. Mazda Canada Inc.1, the Québec Court of Appeal reversed the judgment of first instance2 and ordered Mazda to pay damages to the drivers of 2004, 2005, 2006 or 2007 Mazda 3 vehicles affected by a particular design flaw. The locking mechanism on the driver’s side appeared to be defective, such that a strategically delivered impact above the door handle on the driver’s side would be enough to neutralize the car’s locking system. The members in the class action were divided into two sub-classes. The first consisted of the owners of vehicles that had been attacked and who claimed the value of stolen items, the cost of damaged doors and their insurance deductibles, if any (“Group 1”). The second sub-class claimed compensation for the inconvenience of having to bring their cars to their dealerships for the installation at no charge of a reinforcement device for the car’s door locking system (“Group 2”). In addition, both groups claimed a reduction in the sale price on the grounds that Mazda had failed to disclose an important fact, as well as punitive damages. THE JUDGMENT OF FIRST INSTANCE The Superior Court of Québec dismissed the class action on its merits on the ground that the door’s locking mechanism did not have a design flaw because, according to the use for which it was intended, the mechanism created a sufficient obstacle, substantially reducing the possibility of theft. It should be noted that there are no security standards governing the efficacy of car locking systems. Consequently, the ease with which the protection system could be circumvented did not amount to a loss of use. The Court also did not agree that Mazda had engaged in a prohibited business practice in failing to disclose an important fact concerning a security feature. In any event, the criminal intervention of a third party broke the chain of causality between the alleged defect and the damages sustained. As for the claims of the members whose vehicles were not broken into (Group 2), the Court was of the view that they had not suffered any manifestation of the defect. The fact that they had to bring their cars to their dealerships for installation of a reinforcement mechanism in the locking system was one of life’s little annoyances and did not therefore warrant an award of damages. As there was no evidence that Mazda had been reckless regarding its legal obligations, the Court also dismissed the claim for punitive damages. THE COURT OF APPEAL JUDGMENT THE CONSUMER PROTECTION ACT (CPA) AND THE CONCEPT OF LATENT DEFECT The CPA stipulates that goods must be fit for the purpose for which they were normally intended (section 37 CPA) for a reasonable length of time, which will vary according to the price paid, the terms of the contract and the conditions of their use (section 38 CPA). If the goods cannot be used for the consumer’s reasonably expected purpose, there is a presumption that the defect existed prior to the sale. Furthermore, neither the merchant nor the manufacturer can argue that they were unaware of the defect (section 53 CPA). The Court confirmed that the aforementioned warranties are a particular application of the concept of latent defect in Quebec civil law. The Court added an important qualification: by operation of the CPA, a consumer wishing to argue loss of fitness for purpose under section 37 CPA has a less onerous burden of proof than a purchaser invoking the warranty of quality under the Civil Code of Québec (CCQ). Indeed, an action invoking the warranty of quality under the CCQ must satisfy four tests, namely, the defect must: 1) be latent, 2) be sufficiently serious, 3) be unknown to the buyer and 4) have existed at the time of the sale. The Court was of the view that, like the warranty provided in section 38 CPA, the warranty against loss of use under section 37 CPA exempts the consumer from having to prove the existence of a latent defect, provided that the consumer conducts an ordinary examination of the item before purchasing it. The Court stated that the presumption of the existence of a hidden defect broadens the [translation:] “traditional concept” of latent defect in that a consumer could benefit from the fitness for purpose warranty under section 37 CPA without the item being affected by a material defect. The consumer need only show that there is a serious loss of use and that he or she was unaware of its existence at the time of the sale. APPLICABILITY OF THE FITNESS WARRANTY The Court noted that the fitness warranty imposed on merchants and manufacturers creates an obligation of result. That obligation is assessed primarily on the buyer’s reasonable expectations. The courts must apply an objective standard, namely the average consumer’s expectations assessed in light of the nature of the product and of its intended use. The Court noted that although often raised as a defence, the fact that a merchant is in compliance with legal or industry standards does not exonerate it unless there has been a finding of loss of use. Furthermore, it stated that [translation:] “the absence of standards does relieve the manufacturer of its obligation to take into account the needs and reasonable expectations of its customers”. The Superior Court therefore erred in holding that under normal use the locking mechanism worked very well. That analysis does not consider the expectations of the consumer who legitimately believes that his or her vehicle has a locking system capable of creating [translation:] “a reasonable obstacle against malicious intrusions”. Applying the presumptions provided in section 37 CPA regarding the prior existence of the defect and the presence of a latent defect, the consumer need only show that the weakness in the locking system was substantial and that, had the consumer known about it, he or she would not have bought the vehicle. In that respect, the Court accepted the appellant’s arguments and held that any consumer aware of the weakness of the locking system would have refused to purchase that model for the price paid. The Court therefore reversed the judgment of first instance and held that the Mazda vehicles covered by the class action were affected by a significant loss of use giving rise to the compensatory measures provided for in section 272 CPA. THE DUTY TO INFORM Section 228 CPA prohibits the merchant, manufacturer, or advertiser from failing to mention an important fact. Unlike the judge of first instance, the Court of Appeal was of the view that the “important fact” referred to in section 228 CPA is not [translation:] “aimed solely at protecting the physical safety of consumers”, but also targets any key element of a contract. An element will be key if it is likely to interfere with the consumer making an informed decision. Mazda had the obligation to disclose the defect in the protection system as soon as it became aware of it given that the members of the group would not have contracted under the same terms and conditions. Therefore, all consumers who purchased a vehicle between the date Mazda learned that its locking system was defective (October 3, 2006) and the date it launched its special correction program (January 28, 2008), and who were unaware of the defect in the security system, are entitled to claim a reduction of the price pursuant to section 272 CPA. PUNITIVE DAMAGES The Court of Appeal reiterated that violation of a provision of the CPA does not automatically give rise to punitive damages, emphasizing the onerous nature of the burden of proof required in this instance. Agreeing with the judge of first instance, the Court of Appeal stated that an analysis of the facts does not demonstrate that Mazda acted [translation:] “in a deliberate, malicious or vexatious manner, or that its conduct could be characterized as seriously ignorant, reckless or negligent of such a degree of severity” and, hence, the members are not entitled to punitive damages. EXTRACONTRACTUAL DAMAGES (GROUP 1) According to the Court of Appeal, the criminal intervention of a third party did not break Mazda’s chain of responsibility (novus actus interveniens). The protection system of the vehicles was affected by a design weakness, and it is because of that weakness that wrongdoers were able to take advantage of that condition. The damage sustained by members whose vehicles were damaged or stolen is therefore the result of the fault committed by Mazda of not having designed a locking system that could provide [translation:] “a reasonable obstacle against malicious intrusions”. TROUBLE AND INCONVENIENCE The Group 2 members claimed compensation for the inconvenience resulting from Mazda’s recall campaign aiming to correct the defect of the safety system of its vehicles. Now, although the Court of Appeal acknowledged that the campaign may have caused inconvenience, it was of the view that it did not exceed the [translation:] “normal inconvenience suffered by all vehicle owners here and there over the normal course of a year”. From a procedural perspective, the Court again acknowledged that where adjudication of such a claim requires consideration of subjective elements specific to each member of a group, collective action is not the appropriate recourse. Indeed, claims based on inconvenience sustained present highly individual aspects. Referring to the latin maxim de minimis non curat lex, the Court of Appeal noted that it would be inadequate to take up the time of the courts to deal with claims of small consequence. Both groups also claim damages for trouble and inconvenience for having been under the fear that their vehicles would be vandalized and the inconvenience associated with the constant search for safe parking. That claim was dismissed. The Court of Appeal noted that the purpose of compensating a party is not to indemnify all the [translation:] “frustrations and sensitivities associated with the slightest breach by a person with whom that party interacts”. It further noted that considering its individual nature, this type of claim does not readily lend itself to collective indemnification. CONCLUSION The Court of Appeal held that Mazda 3 vehicles for the years 2004 to 2007 were affected by a significant loss of use. However, Mazda has proved that it remedied that effect in its correction campaign (272 (a) CPA). The members of Group 1 may not therefore obtain, in addition to that remedy, additional indemnification in the form of a reduction of their obligation. However, the members of Group 1 are entitled to compensatory damages (272 CPA) pursuant to the independent action for any of the specific remedies provided for in section 272 (a) to (f) CPA. As far as Group 2 is concerned, the Court was of the view that their claims were unfounded. Lastly, in the Court’s view, Mazda had failed to disclose important information to its customers (228 CPA) and that violation of the law allowed certain members in Group 1 and Group 2 to have their obligations reduced (272 CPA), namely those consumers who were unaware of the defect in the security system and who purchased a vehicle between the date Mazda learned that its locking system was defective and the date it launched its special correction program. COMMENTS This Court of Appeal decision clarifies a number of aspects of procedural and substantive law. The Court stated that under the legal warranty a merchant may acquit its obligations in kind, pursuant to section 272 (a) CPA. This shows the importance of swift reaction by a manufacturer who becomes aware of the existence of use affecting a product that it puts on the market. In such cases, the Court imposes stringent transparency obligations on manufacturers, who in return receive a measure of comfort resulting from the preventive or curative measures that they may implement and that will help them eliminate potential liability or reduce it to a minimum. If the Court’s decision is followed, claims for compensation on the grounds that a recall procedure that was launched inconvenienced those affected by the recall, would be disallowed. The importance of informing its customers of defects affecting its products is an integral part of performing the obligation to inform incumbent on all manufacturers and merchants.   2016 QCCA 31. 2014 QCCS 2617.

 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: https://www.lavery.ca/en/publications/our-publications/1882-nouveautes-en-droit-de-la-consommation.html. 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: https://services.justice.gouv.qc.ca/DGSJ/RRC/DemandeRecours/DemandeRecoursRecherche.aspx..

In a decisive victory for the Plaintiffs in class actions against the three Canadian leading tobacco companies1, the Québec Superior Court ordered the Defendants to pay more than 15 billion dollars in moral damages2 and punitive damages. There were more than 253 hearing days3 and 16 years of proceedings. THE ACTIONS In February 2005, Justice Pierre Jasmin authorized two class actions against JTI-Macdonald (JTM), Imperial Tobacco (ITL) and Rothmans, Benson & Hedges (RBH). The first class represented by Cécilia Létourneau, was instituted on behalf of 918,000 smokers addicted to cigarettes. They claimed $5 000 per member as moral damages and $5 000 as punitive damages. The other class action introduced by the Conseil québécois sur le tabac et la santé (CQTS), and more widely known as the Blais case, was instituted on behalf of nearly 100,000 smokers and ex-smokers who had developed lung and throat cancer or emphysema. The amount claimed was of $100,000 in moral damages and $5,000 in punitive damages per class member. The Plaintiffs had waived any right to make individual claims for compensatory damages. The two class actions, spanning between 1950 and 19984, were joined for trial. THE JUDGEMENT In a 276 pages decision, Justice Brian Riordan ruled that the Companies had knowledge of the harm caused by smoking, deliberately withheld critical information and knowingly made false and misleading public statements. The Court reviewed the conduct of each Company and found as follows: The Companies manufactured and sold a product which was hazardous and harmful to the health of the consumers. The Companies had knowledge of the risks and dangers associated with the use of its product. The Companies trivialized the risks and dangers of smoking and failed to disclose information on the subject during the entire duration of the class proceedings. Beginning in 1962, the Companies conspired to prevent users of their products from becoming aware of the inherent hazards of such use. The Companies interfered with the right to life, personal security and inviolability of the Class Members, intentionally, prioritizing profit over health. FAULT The Companies were found to have engaged in serious misconduct under the Civil Code of Québec, the Consumer Protection Act (CPA) and the Charter of Human Rights and Freedoms, thus incurring liability for moral and punitive damages. The Court found that the companies: Contravened their general duty not to cause injury to another person5. Contravened the duty of a manufacturer to inform its customers of the risks and hazards involved in using its products6. Unlawfully interfered with a right under the Quebec Charter7. Engaged in a prohibited practice under the CPA8. PARTIAL EXONERATION Knowledge by a consumer of a product’s defect and its continuous use can release the manufacturer of its liability9. However, Justice Riordan specified that in the case of products hazardous to the physical well-being of the consumers, the test to assess public knowledge is more “stringent” and requires higher standards. Despite warnings on tobacco packages since 1972, such statements were found to be incomplete and insufficient by the Court. The Court determined that, as of January 1, 1980, consumers knew or should have known the risk of contracting tobacco related diseases10, and, as of March 1, 1996, of the risks of becoming addicted to tobacco. Therefore, members who started and continued after these periods11 committed a contributory fault. The Court apportioned 80% of the liability after the above dates to the Companies and 20% to the members. CAUSATION The Court concluded that faults committed by the Companies caused members to smoke. Justice Riordan favoured the “it-stands-to-reason” test stating that the presence of other external factors leading to smoking did not have the effect of discharging the Companies from their liability. It was found that presumptions were not required to eliminate all other possibilities insofar as the Plaintiffs had shown that the Companies’ faults led in a logical, direct and immediate way to the members’ smoking. With respect to the Blais case, Justice Riordan agreed that epidemiological evidence is sufficient to prove individual causation of tobacco related disease. He however specified that this evidence is permitted because of the application of article 15 of the Tobacco-Related Damages and Health Care Costs Recovery Act12 which allows causation to be proved “on the sole basis of statistical information”. DAMAGES The Court orders collective recovery (aggregate damages) if the evidence allows for an assessment of the total amount of members’ claims with sufficient accuracy13. For the Letourneau case, despite the fact that the three components of liability were found to be present, the Court did not allocate moral damages because the evidence did not allow for sufficient accuracy among class members as to the nature and degree of such damages. For the Blais case, the Court awarded solidary moral damages in the amount of $6,858,864,00014. The respective liability of the Defendants was established to be 67% for ITL, 20% for RBH and 13% for JTM. In addition, The Court found that all three companies had engaged in a reprehensible conduct which warranted an award of punitive damages against them under both the Quebec Charter and the CPA. In light of the parties’ conduct and their ability to pay, the judge ordered the Defendants to pay $1,31 billion in punitive damages15 to the members of the two classes based on one year of before-tax profits for each Defendant. It should be noted that in Quebec, in cases of collective recovery where individual liquidation is ordered, the Court has discretion to not return the unclaimed portion to the Defendants. It disposes of the unpaid funds taking into consideration the interest of the members16. The balance is usually allocated as a Cy-Près donation to non-profit organizations whose activities are related to the interests of the class members. INITIAL DEPOSIT A judgement ordering a collective recovery of claims orders the debtor either to deposit the established amount, or to carry out a determined reparatory measure, or both. In order to ensure that the victims would be compensated and suspecting that the Companies would not remain in business if they deposited the full amount, the Court fixed an initial deposit of $1 billion. Should these amounts be insufficient, the judge reserved the right for the Plaintiffs to request additional sums. PROVISIONAL EXECUTION NOTWITHSTANDING APPEAL Considering the exceptional nature of this case, the Court approved the plaintiffs request for a partial provisional execution of the damages awarded. The judge pointed out that the case had begun 17 years ago and that an appeal could take up to 6 years. Meanwhile, since smoking affects the physical well-being of consumers, it was deemed to be in the interest of justice that they be compensated as soon as possible. Therefore the judge ordered provisional execution in the next 60 days, regardless of an appeal, of an amount equal to its initial deposit for moral damages in addition to both condemnations of punitive damages representing more than $1 billion. The judge will decide at some later date how to distribute these funds. CONCLUSION The defendants have already issued statements announcing their intention to appeal the decision and ask the Court of Appeal to set aside the provisional execution order. It should be noted that at least seven similar class actions are ongoing in Canada as well as 10 healthcare cost recovery lawsuits. The amount claimed in many of these cases exceeds even the amount awarded by the Québec Superior Court. This is the first class action case in which class members obtain an award in a tobacco case in Canada. Certification for a similar class action in Ontario was dismissed in 2004 in the Caputo case17. It remains to be seen how all these cases will play out and how they will eventually relate to each other. SUMMARY TABLES OF DAMAGES AWARDED18 COMPANY MORAL DAMAGES BLAIS PUNITIVE DAMAGES BLAIS PUNITIVE DAMAGES LÉTOURNEAU ITL $670,000,000 $30,000 $72,500,000 RBH $200,000,000 $30,000 $46,000,000 JTM $130,000,000 $30,000 $12,500,000   MORAL DAMAGES LIABILITY Blais Member who started smoking before January 1, 1976 Companies – 100% Blais Member who started smoking from January 1, 1976 Companies – 80% / Member 20% Létourneau Member who started smoking before March 1, 1992 Companies – 100% Létourneau Member who started smoking as of March 1, 1992 Companies – 80% / Member 20%   PUNITIVE DAMAGES LIABILITY Blais claim accruing before November 20, 1995 Prescribed Létourneau claim accruing before September 30, 1995 Companies – 100% Blais claim accruing as of November 20, 1995 Companies – 100% Létourneau claim as of September 30, 1995 Companies – 100%   _________________________________________ 1 Létourneau v. JTI-MacDonald Corp. (C.S., 2015-05-27), 2015 QCCS 2382. 2 Commonly referred to as non-pecuniary damages. 3 The trial stage began on March 12, 2012 and ended on December 11, 2014. 4 Date on which the motions for authorization were served. 5 Art. 1457, Civil Code of Québec. 6 Art 1468 and following of the CCQ. 7 Art 1 and 49 of the Charter of human rights and freedoms. 8 Art 219 and 228 of the Consumer Protection Act. 9 Art. 1473 CCQ. 10 Lung and throat cancer or emphysema. 11 The Court ruled that it takes approximately 4 years to become dependent to smoking. Therefore Blais Class Members who started to smoking after January 1, 1976 and Letourneau Class members who started smoking after March 1, 1992 and that continued smoking after theses dates must share liability. 12 Art. 15 Tobacco-Related Damages and Health Care Costs Recovery Act ch.R-2.2.0.0.1 (Qc) of 2009; In an action brought on a collective basis, proof of causation between alleged facts (...) may be established on the sole basis of statistical information or information derived from epidemiological, sociological or any other relevant studies, including information derived from a sampling (...). 13 Art. 1031 CCQ. 14 Once interest and the additional indemnity of the Civil Code are added, this sum increases to $15,500,000,000. 15 The judge decided that the circumstances justified that 90% of the total punitive damages go to Blais members and 10% to Létourneau members. Considering the amount allocated for moral damages in the Blais file, the Court made a symbolic award and ordered each company to pay $30,000 in punitive damages which represents one dollar for each Canadian death this industry causes every year. 16 Art 1036 CCP. 17 Caputo v. Imperial Tobacco Ltd., 2004 24753 (ON SC). 18 Tables 910 and 1113 of the decision.