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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.

The Superior Court of Québec dismissed an application for authorization to institute a class action against Yahoo! Inc.1 (hereinafter “Yahoo!”) seeking damages as a result of cyberattacks that compromised the confidentiality of user data. Context In September 2016, Yahoo! issued a press release announcing that nearly 500 million users were reportedly victims of a cyberattack in 2014. In December 2016, the company informed its users of another cyberattack that it claims took place in 2013. In February 2017, users were informed that the use of cookies apparently allowed a third party to access information contained in their accounts between 2015 and 2016. While a class action was brought in Ontario in December 2016, an application for authorization to institute a class action was filed in Québec the following month seeking compensation for users who were victims of one or more of these cyberattacks. The decision No arguable case After limiting the class to Québec residents whose information was lost and/or stolen between 2013 and 2019, the Court addressed the test set forth in paragraph 2 of article 575 of the Code of Civil Procedure. According to this criterion, the plaintiff must demonstrate that the alleged facts appear to justify the conclusions sought. The Court must distinguish factual allegations from arguments, opinions, unsupported inferences and hypotheses, as well as assertions that are implausible or false. This analysis is carried out in light of the plaintiff’s cause of action. In this case, the plaintiff had a Yahoo! email account. She alleged having suffered harm because her account may have been hacked during the 2013 cyberattack, although the nature of the compromised information is not yet known. She added that she suffered additional harm due to the “imminent” and “certainly impending” threat of identity theft and fraud resulting from the sale of her information on the black market and its use by criminals. She was also embarrassed because some of her friends received spam emails from her account in her name. As a result, she must now take steps to protect her personal and financial information. Building on the principles set out in the Sofio2 and Mustapha3 decisions, the Court reiterated that the demonstration of an alleged fault does not presuppose the existence of prejudice and that the latter must be serious and prolonged. Embarrassment and temporary inconveniences of an ordinary nature do not constitute compensable damages. Contrary to the allegations in the application, the Court considered that the plaintiff’s answers during her examination demonstrated that she has no reason to believe that she was a victim of identity theft or fraud, since she did not identify any suspicious charges and did not receive a poor credit report. In addition, she continued to use her Yahoo! account and admitted that she did not purchase any identity protection services, such as credit monitoring. Thus, the only prejudice the plaintiff suffered is the fact that she had to change her passwords for all of the accounts associated with her Yahoo! email address and the embarrassment she suffered because of the spam emails that were sent to her friends. On this point, the Court noted that none of the spam emails were filed into the Court record and that none of the recipients of the spam emails suffered harm. Consequently, the Court concluded that the plaintiff had not demonstrated the existence of an arguable cause. The Court distinguished the facts in this case from those in Zuckerman4 and Belley5, in which the plaintiffs had incurred expenses to protect their information or had been victims of fraud or identity theft. Inadequate representation Adequate representation implies that the representative plaintiff has a valid personal cause of action. However, a civil liability action requires the demonstration of a legal basis for the claim of damages, which was not achieved in this case. To summarize: It is not enough to claim the existence of a fault: damage must result therefrom. The notion of “compensable harm” must go beyond mere annoyance. Conclusion Legal action brought as a result of data breaches has increased exponentially in recent years. Cybercrime has become the second most common type of financial fraud. Any company that retains client data should be aware of the risks associated with cyberattacks and the potential lawsuits. To minimize risks, several measures can be implemented, such as adopting a response plan for cyberattacks, training employees and regularly updating security measures. For example, the PCI DSS (Payment Card Industry Data Security Standard) provides a detailed framework that allows companies to implement secure transaction processes. It is recommended that companies consult an IT specialist or hire an internal expert for guidance. It is also recommended that companies contact their insurers to verify their insurance policy coverage and, if necessary, obtain cyber risk insurance coverage. For class action practitioners, this decision once again demonstrates the importance of bearing in mind the impact that the examination of the representative plaintiff could have on the outcome of a case.   Bourbonnière v. Yahoo! Inc., 2019 QCCS 2624. Sofio c. Organisme canadien de réglementation du commerce des valeurs mobilières (OCRCVM), 2015 QCCA 1820. Mustapha v. Culligan of Canada Ltd., 2008 SCC 27. Zukerman v. Target Corporation, 2015 QCCA 1809. Belley v. TD Auto Finance Services Inc./Services de financement auto TD inc., 2015 QCCS 168/2015 QCCA 1255.

Introduction Although 24 years of jurisprudence have gone by since its codification in article 1375 of the Civil Code of Québec, the notion of good faith remains a vague concept whose incidence on the performance of contracts is still unclear.  Although it is increasingly evident that good faith is not a mere interpretive concept without substantial meaning, the most fundamental uncertainty remains— or rather, remained, until the Supreme Court of Canada rendered the decision that is the subject of this bulletin. This uncertainty has to do with knowing to what extent the general obligation of good faith can change the content of a contract duly entered into by the parties. In other words, could the judge, on the basis of article 1375 CCQ, intervene in the contract, the “law for the parties,” to remodel it according to the judge’s understanding of good faith? Context In this matter, the plaintiff, Churchill Falls, argued that the other contracting party, Hydro-Québec, had an obligation to renegotiate the price in a contract under which the latter had undertaken to purchase most of the electricity produced by the Churchill Falls power plant at a fixed price for a period of 65 years. According to Churchill Falls, this obligation to renegotiate the price was a matter of good faith and was required of Hydro-Québec due to the changes in the electricity market that meant that the fixed price in the contract had become too low compared to the prices paid on this market. The Court thus had to decide whether it could, on the basis of the notion of good faith, add an obligation to renegotiate the price to the fixed price contract. Decision The Supreme Court of Canada responded to this question in the negative, as had the Superior Court and Court of Appeal of Quebec. To do this, it analyzed and rejected each of the arguments submitted by Churchill Falls. We will briefly examine these arguments and the way in which the Supreme Court rejected them. The contract is not a joint venture contract Churchill Falls initially claimed that the contract that it had signed with Hydro-Québec was a joint venture contract, which, by its very nature, implies an equitable sharing of risks and profits, and therefore entails an obligation to renegotiate the price in order to better share the profits generated from the sale of electricity. The legal nature of a joint venture contract is disputed since some authors, looking to Quebec jurisprudence, are of the opinion that it consists of an undeclared partnership, while others defend the existence in Quebec law of a sui generis contract of joint venture.  Without getting into this debate, the majority of the Court was of the opinion that the contract in question fulfilled neither the criteria of an undeclared partnership contract, nor those of a sui generis contract of joint venture. In fact, regarding the undeclared partnership, the evidence showed no common intention to form a partnership (animus societatis) nor any combining of resources. Regarding the sui generis contract of joint venture, the majority of the Court identified from authors who defend this unnamed legal form the determining factor of “an intention to jointly assume the responsibility involved in carrying out the proposed project.” However, the contract in question clearly defined and divided the responsibility of each party to the contract in such a way that no intention to share responsibility for the project could be deduced. The contract is not a relational contract Churchill Falls then claimed that the contract that it had signed with Hydro-Québec was a relational contract that, by its very nature, entailed a stricter obligation of good faith, including, given the change in circumstances, the obligation for the parties to renegotiate the price in order to better share the profits from the sale of electricity. The majority of the Court rejected this argument because they were of the opinion that the contract in question was not a relational contract. They did not rule on the second part of this argument, regarding the scope of a good faith obligation if it were a relational contract. Regarding the definition of relational contracts, the position of the majority of the Court sets a precedent. In fact, while jurisprudence and authors have defined the relational contract in a variety of somewhat eclectic ways, the majority of the Court accepted only the definition proposed in 1998 by Professor Belley: “a relational contract can roughly be defined as a contract that sets out the rules for a close cooperation that the parties wish to maintain over the long term.” In essence, relational contracts provide for economic coordination as opposed to setting out a series of defined prestations. It is a corollary to the emphasis on the parties’ relationship that their respective prestations are not defined in much detail. The contract in question here clearly quantified and defined each party’s prestations, so that no important prestations were left undefined. According to the majority of the Court, this shows that the parties intended the project to proceed according to the words of the contract at face value, not on the basis of their ability to agree and cooperate from day to day to fill any gaps in the contract: “The Power Contract sets out a series of defined and detailed prestations as opposed to providing for flexible economic coordination. It is not therefore a relational contract.” No implied obligation to renegotiate the price Churchill Falls (CFLCo) also claimed that an implied obligation to collaborate and renegotiate the price is incident to the contract according to its nature, under art. 1434 CCQ. The majority of the Court dismissed this argument. On this subject also, the position of the majority of the Court sets a precedent. In fact, to a certain degree, the judges strengthened and shed light on the concept of implied contractual obligations under article 1434 CCQ. According to them, an implied duty may be incident to a contract according to the nature of the contract if the duty is consistent with the general scheme of the contract and if the contract’s coherency seems to require such a duty. However, such an implied clause must not merely add duties to the contract that might enhance it, but must fill a gap in the terms of the contract such that it can be presumed that the clause reflects the parties’ intention, which is inferred from their choice to enter into a given type of contract. The majority of the Court noted that in this case, there is nothing to suggest that the parties’ prestations would be incomprehensible and would have no basis or meaningful effect in the absence of an implied duty according to which Hydro-Québec must either exceed the usual requirements of good faith in cooperating with CFLCo or redistribute windfall profits: “The Contract governs the financing of the Plant and the sale of electricity produced there, and also strictly regulates the quantity of electricity to be provided by CFLCo and the price to be paid by Hydro-Québec. The meaningful effect of the sale for the parties is clearly identifiable: Hydro-Québec obtains electricity, while CFLCo receives the price paid for it. The fact that the price might not be in line with market prices does not destroy the very logic behind the sale or deprive it of any meaningful effect. Furthermore, the benefits each party derives from the sale are related to the other prestations associated with the construction of the Plant. There is no gap or omission in the scheme of the Contract that requires this Court to read an implied duty into the Contract in order to make it coherent.” The limits of good faith and the rejection of the doctrine of unforeseeability Finally, Churchill Falls argued that independently from the nature of the contract, Hydro-Québec was nonetheless obliged to renegotiate because, in Quebec civil law, the concepts of good faith and equity condition the exercise of the rights created by any type of contract. It argued that these concepts prevent Hydro-Québec from relying on the words of the Contract, because to do so in circumstances in which the Contract effectively provides for disproportionate prestations would be contrary to its duty to act in good faith and in accordance with equity. And given that the prestations owed by the parties have been disproportionate since the changes in the market occurred, it argued that Hydro-Québec has been violating its duties related to good faith since then by refusing to renegotiate the Contract.  In this regard, the majority of the Court began by categorically affirming that the doctrine of unforeseeability, which Churchill Falls seemed to rely on indirectly, was not part of Quebec civil law. The majority of the Court noted that Churchill Falls was seeking to use the concepts of good faith and equity in a manner that goes beyond the limits of the doctrine of unforeseeability even though the Quebec legislature has refused to incorporate that doctrine into the province’s civil law. They added that, “If unforeseeability itself has been rejected, a protection analogous to it that would be linked only to changes in circumstances without regard for the core conditions of the doctrine as recognized in other civil law jurisdictions could not become the rule in Quebec law.” The majority of the Court rejected equity as a basis for a possible obligation to renegotiate the price, because “its effect would then be to indirectly introduce either lesion or unforeseeability into our law in every case.” They added that the equity provided in article 1434 as a source of implied obligations “is not so malleable that it can be detached from the will of the parties and their common intention as revealed in and established by a thorough analysis of the whole of the relevant evidence.” In fact, the evidence revealed that both parties to the contract were experienced, and they negotiated its clauses at length and intended one of them to bear the risk of fluctuations in electricity prices. The majority of the Court also rejected the argument of good faith as a basis for a possible obligation to renegotiate the price. Their analysis in this regard is based on the following two assumptions, which clarify the concept of good faith. Firstly, according to them, good faith is a standard associated with the parties’ conduct; it cannot be used to impose obligations that are completely unrelated to their conduct. In other words, for good faith to be invoked with success, unreasonable conduct by one of the parties must be shown. In this case, Hydro-Québec did nothing but demand the performance of the contract as it had been agreed upon. The second assumption is that good faith serves to maintain the relevance of the prestations that form the basis of the contract even if the words of the contract do not specifically prohibit the parties from doing something that would impede its fulfilment. The majority of the Court adds that, “if the main prestations of a contract are renegotiated and modified, they will rarely remain relevant.” In other words, “Because good faith takes its form from the terms of the contract, it cannot serve to undermine the contract’s paradigm. But in the view of the Superior Court and the Court of Appeal, that is exactly what CFLCo is arguing for in this case: CFLCo is demanding that Hydro-Québec renounce its access to a source of electricity production at a stable cost, that is, to the principal benefit it derives from the Contract.” Commentary This decision sheds a very useful light on the relationship between good faith and the contents or scheme of a contract. Closing the door to the general application of the doctrine of unforeseeability, the Court instead favoured the binding force of contracts and contractual stability. Contrary to the claims of Churchill Falls, the obligation to act in good faith cannot oblige the parties to renegotiate the fundamental terms of the contract, but aims rather to enable the performance of the prestations under the contract. However, although in principle it is legitimate to demand adherence to a contract, a party’s rigidity must not reach the point of abuse of rights, in which case it could be sanctioned for its conduct and held responsible if there is resulting damage. Moreover, various judicial instruments can help palliate the unforeseeable. If the unforeseen situation is severe enough to be qualified as superior force under the Civil Code, in that it prevents a party to the contract from fulfilling its obligations, said party could be released from them. The parties are also free to define the concept of superior force in their relationship through a contractual clause. Similarly, the parties can limit the risks associated with the unforeseeable in long-term contracts through adjustment clauses, which can take several forms (indexing clauses, revaluation clauses, renegotiation clauses, etc.). This could be especially useful in a fixed-price contract where the risks are usually attributed to the service provider ahead of time. However, as the matter of Churchill Falls clearly shows, a party that has agreed by contract to assume a risk without providing for such adjustment mechanisms will have to assume the consequences.  

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.

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).

 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.

Lavery closely monitors new developments in consumer law and is committed to keeping the business community informed of the latest developments in this area of the law by regularly publishing newsletters dealing with new case law or legislative changes which may impact, influence, or even transform practices in the retail sector. The current projects of the legislator respecting judiciary case management of consumer law may very well modify the manner in which merchants handle customer complaints. In this respect, consumer law is a privileged child of the Code of civil procedure reform. Indeed, the Quebec government recently implemented a mandatory mediation pilot project for the Small Claims Division of the Court of Québec. On May 15, 2015, the Regulation to establish a pilot project on mandatory mediation for the recovery of small claims arising out of consumer contracts1 (the “Regulation”)2 came into force. Pursuant to the Regulation, mandatory mediation is imposed on the parties where the claim before the Small Claims Division arises from a consumer contract. A consumer contract includes any agreement between a merchant and a consumer for the acquisition of goods or services.3 When one considers that the Small Claims Division has jurisdiction to hear cases with a value of up to $15,000, it follows that a significant portion of the retail industry is covered by this pilot project. The pilot project, which is established for 3 years, only covers the judicial districts of Gatineau and Terrebonne,4 but we expect that the government will make it applicable throughout the province if the results are positive. To a certain extent, Quebec would follow suit with neighbouring Ontario, where mediation is mandatory for all matters that come before the Small Claims Court.5 WHAT JUSTIFIES MANDATORY MEDIATION? Mandatory mediation gives concrete expression to one of the guiding principles of the new Code of Civil Procedure (hereinafter, the “NCCP”) that came into force on January 1, 2016, which is to ensure accessibility to the courts and swiftness of civil justice. This is particularly illustrated by the fact that the legislator dedicated Title I of Book I of the NCCP to private dispute prevention and resolution processes. Contrary to these private dispute prevention and resolution processes such as negotiation, mediation and arbitration chosen by mutual agreement of the parties,6 the pilot project establishes mandatory mediation. The legislator therefore gives preferred treatment to judiciary claims between consumers and merchants, which may be explained by two objectives: (i) Free up the courts and promote swift access to justice Approximately 25% of the cases at the Small Claims Division concern claims involving consumer contracts.7 In addition, a study of the Office de la protection du consommateur published in 2010 reveals that 83% of the merchants continue to refuse mediation.8 One may think that the legislator wishes to reverse the trend and compel the parties to reestablish their communication in order to settle their disputes according to mutually agreed upon conditions. This measure will free up the courts, thus promoting swift access to justice. (ii) Restore the balance between the parties in a consumer contract The imbalance between consumers and merchants9 has always been a source of concern for the legislator. By making mediation mandatory as part of the pilot project, the government reaffirms its will to protect consumers by requiring merchants to discuss with them before an impartial third party in order to settle a dispute which ended up before the courts. Making consumer contracts subject to mandatory mediation a priority is explained by the fact that consumer contracts rank among the most common contracts, with personal consumption expenses in Quebec representing more than 100 billion dollars (which includes the automobile and food sectors).10 The obligation to submit these cases to mediation thus promotes maintaining harmony between the parties, which is an essential element to the sector’s health. WHAT MAY WE EXPECT? The process begins when the Small Claims Court clerk notifies the parties that they are subject to mediation.11 Our interpretation of the Regulation makes us conclude that this notice will be sent by the clerk once the defence is filed with the Court. The clerk must offer the mediation mandate to a mediator whose name is on the list of mediators that he has drawn.12 These mediators are lawyers or notaries certified by their professional orders.13 Once appointed, the mediator communicates with the parties to agree on a date and time for the mediation session.14 The process is intended to be swift: the mediator must hold the mediation session within 30 days following the date on which his mandate has been confirmed to him in writing.15 When a party fails to attend the mediation session so fixed or to agree on holding such a session, the mediator files with the court office a report stating that it is impossible to proceed with the mediation and the case may therefore be heard by the court.16 However, the court may penalize a party’s failure to participate in the mandatory mediation by condemning such party to pay the legal costs or damages or, if the faulty party is the creditor, by reducing or cancelling the interests payable to that party.17 If the mediation is successful, the parties file either a notice that the case has been settled or the agreement they have signed.18 If it is not, the mediator sends to the clerk, within 10 days of the mediation session, a report giving an account of the facts, the positions of the parties and the questions of law raised.19 The case may then be heard by the court.20 MAY ONE REQUEST TO BE EXEMPTED? Having a vested interest for the pilot project to be successful, the government has provided that a party may only be exempted from participating in the mandatory mediation session for a serious reason.21 A party who wishes to be exempted from mandatory mediation must make an application in writing to the court not later than 20 days after being notified by the clerk that a case is subject to mediation.22 The clerk informs the other parties of the application; they then have 10 days to present their observations in writing.23 HOW TO PREPARE FOR MEDIATION? By making mediation mandatory, the government sends a clear message to merchants: they will have to modify some of their complaint processing practices. In order to make the process efficient, and taking into account the fact that time with the mediator is limited, the prior preparation of the mediation session will have a significant impact on its orientation and on the outcome of the dispute. By being well prepared, a merchant will better understand his case, both from a factual and legal point of view, and will be able to highlight the weaknesses of the consumer’s case, if any. In order to be well prepared in the event that the merchant would face a suit and would then have to attend a mediation session, it is crucial for the merchant to do his homework in advance. Thus, he may find it beneficial to establish a clear complaint and claim management policy. Although the structure of the management policy may depend on the nature and the scope of the operations of the enterprise, merchants should minimally address the following questions when developing his policy: Are calls with consumers recorded? With their consent? Are reliable notes of all communications and interventions with consumers taken? In which way? Is there a particular person or persons assigned full-time to complaint and claim management or is the file entrusted with the representative who knows best about the facts of the case? Does the merchant wish to examine the goods which are the subject of the dispute? Does he want to give a mandate to an expert? How should he proceed? Is a response to the demand letter to be sent? In which cases? In which cases will the customer be contacted by phone? Are third parties or witnesses involved in the matter? May compensation, other than monetary compensation, be offered to the consumer in order to settle the dispute? --> a Are calls with consumers recorded? With their consent? b Are reliable notes of all communications and interventions with consumers taken? In which way? c Is there a particular person or persons assigned full-time to complaint and claim management or is the file entrusted with the representative who knows best about the facts of the case? d Does the merchant wish to examine the goods which are the subject of the dispute? e Does he want to give a mandate to an expert? How should he proceed? f Is a response to the demand letter to be sent? In which cases? In which cases will the customer be contacted by phone? g Are third parties or witnesses involved in the matter? h May compensation, other than monetary compensation, be offered to the consumer in order to settle the dispute? Once this policy is established, the following has to be done for each matter: establish the facts in dispute in chronological order prepare the documentary or material evidence (ex.: invoices, correspondence, recordings, etc.) determine what are the practices of the sector in similar situations determine the position and the arguments quantify the claim fix a scale to calculate how much the merchant would be prepared to pay to settle the claim --> a establish the facts in dispute in chronological order b prepare the documentary or material evidence (ex.: invoices, correspondence, recordings, etc.) c determine what are the practices of the sector in similar situations d determine the position and the arguments e quantify the claim f fix a scale to calculate how much the merchant would be prepared to pay to settle the claim Lastly, the merchant would be well-advised to hold regular meetings with legal counsel to take stock of the claims subject to mandatory mediation. This will allow him to validate the legal framework of his file and the strategy to adopt at the mediation session. If the merchant establishes a clear complaint and claim management policy and ensures that it is well implemented in his enterprise, these periodic meetings will be quick and efficient. WHAT ARE THE BENEFITS? Mandatory mediation offers definite benefits to the merchant. Firstly, the process is swift and cost-efficient. In fact, the services of the mediator are free since his fees are assumed by the Ministère de la Justice.24 As for the consumer, he can only be satisfied to be offered the opportunity to present his case to an impartial person without being subject to the usual judicial formalities before the court. Secondly, a successful mediation allows the merchant to avoid the risk of seeing the name of his enterprise associated with an unfavourable judgment, sometimes being cited out of context, thus allowing him to protect his image. Thirdly, mediation is a flexible process, the parties are free to negotiate the parameters of their settlement to achieve a mutually satisfying solution. Moreover, since mediation is confidential,25 the information shared during the process cannot be used in legal proceedings if mediation is unsuccessful. Lastly, the process may allow the merchant to better understand the consumer’s case and prepare accordingly for a trial should mediation fail. However, this statement is subject to a caveat: even if the mediation session reveals the other party’s cards, one must always remember that the parties are required to participate in good faith.26 In other words, the merchant should not participate in the mediation session for the sole purpose of verifying the solidity of the consumer’s case, but rather attend with the sole objective of trying to find a solution to the dispute.27 WHAT IS THE BOTTOM LINE? One has to keep in mind that with the pilot project which subjects the claims arising from a consumer contract to mandatory mediation, the legislator wants to promote the dialogue between consumers and merchants. The merchant may participate in this dialogue in an effective manner by establishing a clear complaint and claim mangement policy, which may also include a resolution process which would take place before matters are submitted to the court. Such an approach allows the merchant to quickly demonstrate the seriousness of his file, thus maximizing his chances of achieving a profitable settlement. A merchant can only derive benefits from the process, as establishing a dialogue with consumers shows that he has a clear understanding of his customers’ needs.   Regulation to establish a pilot project on mandatory mediation for the recovery of small claims arising out of consumer contracts, CQLR, c. C-25.01, r. 1. In accordance with articles 28 and 836 of the Act to establish the new Code of Civil Procedure, S.Q. 2014 c. 1. According to section 1 of the Regulation, the definition given to the expression “consumer contract” is that set out in article 1384 of the Civil Code of Québec, that is, “a contract whereby one of the parties, being a natural person, the consumer, acquires, leases, borrows or obtains in any other manner, for personal, family or domestic purposes, property or services from the other party, who offers such property and services as part of an enterprise which he carries on.” Prec., note 1, s. 1. Rules of the Small Claims Court, Reg. 258/98 (Ont.), s. 13.01. Prec., note 2, art. 1. Pierre-Claude LAFOND, L’accès à la justice civile au Québec : portrait général, Cowansville, Éditions Yvon Blais, 2012, p. 140. Pierre-Claude LAFOND, L’accès à la justice civile au Québec : portrait général, Cowansville, Éditions Yvon Blais, 2012, p. 138. Pierre E. AUDET, “La médiation obligatoire pour les petites créances d’au plus 15 000 $ découlant d’un contrat de consommation”, Justice privée et décrochage judiciaire, Les Entretiens Jacques-Cartier, Montréal, October 3, 2014. Luc THIBAUDEAU, Guide pratique de la société de consommation, Cowansville, Éditions Yvon Blais, 2013, p. 157. In 2014, the retail sector has represented in excess of 505 billion dollars in Canada: http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/trad15a-eng.htm. Id. Prec., note 1, s. 6. Id., s. 7. Id., s. 22. Id., s. 21.. Id., s. 26. Id., s. 27. Préc., note 1, s. 28. Id., s. 29. Id. Id., s. 2. For the purposes of the Regulation, the expression serious reason particularly means the existence of an order preventing a party from being in the presence of the other party, the fact that the travelling expenses related to the party’s participation in the mediation exceed the possible advantages or the fact that the parties have already participated in a mediation session for the same dispute. Id., s. 3. Id. Prec., note 1, s. 12. Id., s. 18 to 20. Id., s. 16. Id., s. 16.

 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.