In Ileman v. Rogers Communications Inc., released on June 9, 2015, the B.C. Court of Appeal dismissed an appeal from the B.C. Supreme Court’s refusal to certify a class proceeding against various cellular telephone companies relating to “system access fees.” In dismissing the appeal, the B.C. Court of Appeal articulated important principles regarding the nature of the remedies available for breach of the B.C. Business Practices and Consumer Protection Act (BPCPA) that will have broader application in a variety of class proceedings.

SYSTEM ACCESS FEES

In 1985, when cellular telephones were introduced in Canada, the federal Department of Communications (DOC) required individual cellphone users to apply and pay for an annual “radio license fee.” Some telecommunications companies began collecting these fees from their customers on behalf of the DOC. The fee was charged as a separate line item, and the money were remitted to the DOC. Over time, the licensing system evolved, as did the practices of telecommunications companies. The DOC wrote to cellphone users in 1987, informing them that, effective April 1, 1987, individual licences would no longer be required and explained that instead, providers of cellular services would be charged for spectrum licenses, and, in turn, reflecting this new cost in their invoices to customers. The defendant companies each eventually transitioned to a monthly system licensing fee, and advised customers by 2000-2001 that these fees were used to offset network upgrades, ongoing maintenance and new technology. The defendants therefore conceded that these fees are used in part to offset costs unrelated to government-imposed licensing fees. The essence of the plaintiff’s claim was that the defendants represented to consumers that the system access fee was charged and collected by them on behalf of a third party agency or body, or alternatively that it was a government regulatory cost recovery charge.

In the action, the plaintiff sought a declaration that the representations made by the defendant cellular telephone companies about “system access fees” contravened the BPCPA and a permanent injunction restraining the defendants from making the alleged misrepresentations. He also sought a restoration order — a statutory remedy available under section 172(3) of the BPCPA — for money that the defendants allegedly acquired in contravention of the BPCPA. Finally, he sought an order for restitution against some of the defendants based on the principle of unjust enrichment.

B.C. SUPREME COURT DECISION

The chambers judge concluded that, as pleaded, the claim that the phrase “system access fee” was capable of being misleading or deceptive, was not bound to fail at trial. He also concluded that this claim, together with the remedies of a declaration and an injunction disclosed a cause of action. However, regarding the claim for a restoration order or a refund of money that the defendants allegedly acquired in contravention of the BPCPA, the chambers judge found that the plaintiff was required to have proprietary nexus or interest in the money, and that none was pleaded.

In respect of unjust enrichment, the chambers judge concluded that the contracts signed with consumers, which expressly provided for the payment of system access fees, were a juristic reason for the enrichment. He concluded that it was plain and obvious that the plaintiff’s claim for unjust enrichment was bound to fail.

Following the chambers judge’s reasons, but before the hearing of the appeal, the plaintiff filed a new pleading, claiming a failure of consideration under the contract.

COURT OF APPEAL DECISION

The B.C. Court of Appeal disagreed that the phrase “system access fee” was capable of being misleading given the chambers judge’s finding that there was nothing in the term that suggested that this was a fee payable to or levied by the government.

With respect to the unjust enrichment claim, the Court of Appeal held that the “failure of consideration” pleading was largely superfluous, as the real issue was whether the clauses in the cellular contracts authorizing collection of the system access fees permitted the plaintiffs to retain them for their own use as an agreed to or extra charge for services rendered.

The Court of Appeal also dismissed the plaintiff’s claim for a restoration order. The relevant provision of the BPCPA (173(3)(a)) allows the court to order the restoration of property or money only to a person who has an interest in that property or money. The Court held that although the interest need not be proprietary, it must be an interest recognized by law, such as a constructive trust or damages.

Future litigation will likely consider further the question of what type of “interest” can found a claim for a restoration order under the BPCPA. Given that there was no cause of action made out on the pleadings here, the Court of Appeal did not need to grapple with that issue, beyond clarifying that a proprietary interest is not required. However, the Court of Appeal’s decision confirming that an independent interest must be established will likely narrow plaintiffs’ ability to seek such an order in the future.