Telus overcharged clients who were billed early cancellation fees, rules Quebec appeal court

Telus became the third Canadian telecommunication giant ordered to pay clients who paid excessive cancellation fees after the Quebec Court of Appeal partially overturned a lower court decision that dismissed the class action.

In a case that deals with contract for services, early cancellation fees, abusive clauses and the right of unilateral resiliation under the Civil Code of Quebec, the Quebec appeal court held that Telus overcharged clients who were billed early cancellation fees, just as it did in 2016 in similar class actions against Bell Mobility and Rogers Communications.

More than 166,000 Rogers’ clients who were charged early cancellation fees between 2007 and 2010 stood to share $26.7 million while 76,000 Bell Mobility clients were expected to divvy up $1.6 million, minus legal fees, after the Supreme Court of Canada refused in 2017 to hear leave to appeals lodged by Bell and Rogers.

Heeding guidance from Gagnon c. Bell Mobilité inc., 2016 QCCA 1496, the Quebec appeal court held that clients are entitled to unilaterally resiliate their contracts. It also held that the determination of the abusive nature of cancellation clauses should take into account the economic balance between the parties, including the number of persons involved and whether or not the clause is disproportionate.

“The Telus decision confirms certain trends in class action jurisprudence involving telecommunication companies,” noted Bruce Johnston, a Montreal lawyer with Trudel, Johnston & Lespérance that specializes in class actions.

The class action, launched in 2012, covered two distinct classes. One class covered Telus Mobilité clients who were charged fees when they cancelled their fixed-term contracts for wireless services while the other comprised of clients with Société Telus Communications (STC) who too were charged cancellation fees for wired telephone services.

In 2017, Quebec Superior Court Justice Clément Samson dismissed the class action. He found that the resiliation fees had been disclosed in a sufficiently precise manner, were not abusive under the article 1437 of the Civil Code, and did not constitute consumer exploitation under the Quebec Consumer Protection Act because they did not exceed the “prejudice actually sustained by the respondents” and did not violate the rights of the members to unilaterally resiliated their contracts.

The Quebec appeal court partially overturned the lower court decision. It held that the trial judge did not err in finding that members did not waive their right to resiliate their contracts. But the appeal court found the resiliation clauses to be “clearly abusive because they allowed the respondents to claim resiliation fees that substantially exceed the prejudice sustained as a result of the resiliation of the contracts before the end of the term,” said Quebec Court of Appeal Justice Claudine Roy in a 20-page ruling in Masson c. Telus Mobilité 2019 QCCA 1106. “They disadvantage the consumer in an excessive and unreasonable manner.”

The appeal court pointed out that the early cancellation clauses allowed Telus Mobilité to claim approximately 49 per cent more than the prejudice sustained and STC 38 per cent – a finding that will help class action plaintiffs in the future because the appeal court pegged a figure over what it deemed to be abusive, noted Johnston.

“In the two cases, the figure was under 50 per cent more than the prejudice sustained,” said Johnston. “That is a standard of abuse that is easily reached. So when the appeal court points out that cancellation clauses that allow it to claim 49 per cent more than the prejudice sustained are abusive that is an advancement of the definition of what is abusive.”

The appeal court also reiterated that Quebec’s consumer protection legislation is applicable to federally regulated telecommunication firms for consumer class actions. Many of the members of STC class action are residents of regulated territories deemed to be “high-cost serving areas” by the Canadian Radio-television and Telecommunications Commission (CRTC), and the regulatory agency approved STC’s fees. The trial judge held that he had no jurisdiction to determine whether or not STC’s cancellation fees in the regulated territories were abusive. The appeal court, underscoring that the trial judge did not have the benefit of guidance issued in Bell Canada c. Aka-Trudel 2018 QCCA 829, held however that Quebec Superior Court Justice Samson committed an error by refusing to assert jurisdiction. The objectives behind the federal Telecommunications Act and Quebec’s Civil Code and Consumer Protection Act are not the same, and therefore there is no automatic parallel between them. “They have to be put in their respective context,” said Justice Roy.

“There are still many lawsuits currently underway in which telecommunication firms still try to argue against clear jurisprudence by the Quebec Court of Appeal and the Supreme Court that consumers in civil law regimes, including consumer protection legislation, applies to all federal companies that do business with Quebec consumers,” said Johnston. “That was decided by the SCC in Bank of Montreal v. Marcotte 2014 SCC 55” and more recently still in the Aka-Trudel case, which the nation’s highest court refused to hear leave to appeal. “It’s a bit tedious, truth be told,” added Johnston.

But the appeal court also warned that one cannot draw conclusions based on evidence solely provided by the class action representative to the whole of the class, pointed out Jean Saint-Onge, senior counsel, Ad.E, at Borden Ladner Gervais LLP in Montreal.

“It’s not the first time that the courts have stated that one cannot extrapolate the class representative’s experience to the whole of the class unless there is convincing evidence that all the other members too experienced the same situation but this always proves to be challenging,” said Saint-Onge, an expert on class actions.

The appeal court also “reproached” the lack of evidence by the class over the “precise” number of class members who had paid excessive cancellation fees and the total amounts that they sought, noted Saint-Onge. “One cannot ask the Courts to blindly evaluate, often excessively, collective recovery of claims when there is no evidence that allows it to establish an amount for the prejudice suffered by the group,” said Saint-Onge.

As a result, the appeal court ordered the individual recovery of the claims, and referred the matter back to the trial judge to establish the terms of reimbursement for class members who paid resiliation fees greater than $226.21 to Telus Mobilité and $201.38 to STM.

Lawyers who plead the case for both the class and Telus were not available.

This story was originally published in The Lawyer’s Daily.

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