On June 9, 2015, the B.C. Court of Appeal upheld a lower court’s decision to refuse certification of a proposed consumer class action against Canada’s largest cellular telephone companies in Ileman v. Rogers Communications Inc., TELUS Communications Inc., and others, 2015 BCCA 260. The proposed class action alleged that the term “system access fee” misled consumers into believing that the fee was a government levy.

The decision follows on the heels of two previous B.C. decisions:

  1. In The Consumers’ Association of Canada et al v. Coca-Cola Bottling Company et al, 2006 BCSC 863 (appeal dismissed 2007 BCCA 356) the Court held that the mere use of the word “fee” does not denote or connote a government levy and, in itself, cannot found a deceptive practices claim. Fasken Martineau represented a group of the successful defendants in Consumers’ Association.

  2. In Wakelam v. Wyeth Consumer Healthcare/Wyeth Soins de Sante Inc., 2014 BCCA 36, the Court of Appeal held that s. 172(3) of the Business Practices and Consumer Protection Act (BPCPA) allows the court to order the restoration of property or money only to a person who has an “interest therein”.

In Ileman, the plaintiff alleged the cellular telephone companies represented to consumers that the “system access fee” is charged by and collected by them on behalf of a third party agency or body, or alternatively that it is a government regulatory cost recovery charge (the “Representation”). The plaintiff alleged the Representation was false and argued the Representation amounts to “deceptive acts or practices” within the meaning of the BPCPA. The plaintiff sought a restoration order under s. 172 (3).

In the court below, the chambers judge held it was arguable that the phrase “system access fee”, objectively considered, had the capability of leading consumers to believe that the entirety of the fee was required to offset the cellular telephone companies’ costs paid to government for spectrum licences. On that basis, the chambers judge concluded the plaintiff’s allegation, that the phrase “system access fee” is deceptive, disclosed a cause of action pursuant to the BPCPA.

The chambers judge then examined the claim for relief under s. 172(3) of the BPCPA. He cited Wakelam as stating that a “proprietary nexus” is required for a claim under s. 172(3). The chambers judge concluded that the plaintiff could not demonstrate a proprietary interest in the system access fees he paid and concluded that the claim was bound to fail.

The plaintiff appealed the lower court’s decision on the basis that the chambers judge erred in holding it was plain and obvious that the appellant’s claim for a restoration order pursuant to s. 172(3) of the BPCPA was bound to fail.

On appeal, the cellular telephone companies argued that the chambers judge erred in concluding that the term “system access fee” could be deceptive.

The Court of Appeal’s decision in Ileman is important for defendants in consumer class actions for two main reasons: 1) the Court confirmed that, without more, the word “fee” is not deceptive; and 2) the Court provided clarification on the proper interpretation of “interest” under s. 172(3) of the BPCPA.

The word “fee” is not deceptive

The Court agreed with the cellular telephone companies with respect to the term “system access fee”.

Following Consumers’ Association, the Court in Ileman held that there is nothing in the word “fee” or the term “system access fee” that suggested the fee would be remitted to government as a tax, levy or licence fee. As such, the term “system access fee” could not have the capability of leading consumers to believe that the entirety of the fee was required to offset the defendants’ costs paid to government for their respective spectrum licences. As there was no pleading to support the claim that a consumer could draw the inference that the system access fee was a government levy, there was no cause of action to support class certification.

The Ileman decision confirms “fee” cases will be difficult to certify in British Columbia. Cases premised on an allegation that it is deceptive to call consumer charges “fees”, without more, do not raise a cause of action capable of supporting class certification.

An “interest” in the thing to be restored under s. 172(3)

The Ileman decision also provides some clarification on the proper interpretation of the requirement that a plaintiff must have “an interest” in the thing to be restored under s. 172(3). However, it is somewhat unclear how the Court’s reasoning on this issue will be applied in future cases because the Court’s comments were technically obiter.

The plaintiff argued in favour of an interpretation of s. 172(3) that would allow a consumer to recover money paid to a supplier whenever the supplier obtained the money from that person as a result of a contravention of the legislation. The Court held that such an interpretation was inconsistent with Wakelam andviolated well-established principles of statutory interpretation.

On the other hand, the Court held that an interpretation of s. 172(3) that would require a person to demonstrate a “proprietary nexus” to money being claimed resulted in a severe limit on recovery under s. 172(3) and was inconsistent with the tenor of the statute. The claim would be defeated in every case where the claimant’s money had been co-mingled with other funds.

The interpretation landed on by the Court is effectively a middle ground between the two interpretations discussed above. A plaintiff is not required to demonstrate a “proprietary nexus” to the money being claimed. Rather, a plaintiff is required to demonstrate an interest recognized by law outside of s. 172(3). The Court held that a right to recover damages, for instance, will be sufficient.

As the plaintiff in Ileman could not establish a constructive trust, nor demonstrate that he had personally suffered any loss or damage cognizable in law, the plaintiff did not have “an interest” in any money in the hands of the defendants as that phrase is used in s. 172(3).

While it remains to be seen how the Court’s reasoning on this issue will be applied in future cases, it is unlikely to expand available relief under the BPCPA after Wakelam. The Court was clear that restoration orders under s. 172(3) are merely ancillary. A plaintiff will have no right to a restoration order unless they can demonstrate a legal interest in the monies being claimed.

Summarizing the Court of Appeal’s Decision in Ileman

The Court of Appeal upheld the lower court’s decision to refuse certification on the basis that there was no cause of action under the BPCPA to support class certification. The use of the phrase “system access fee” is not capable of misleading consumers.

View the full decision in Ileman v. Rogers Communications Inc., 2015 BCCA 260.