In Ileman v. Rogers Communications Inc., a unanimous division of the Court of Appeal for British Columbia upheld the lower court’s refusal to certify a claim against Canada’s national telecommunications companies for their charging cellphone users a “system access fee”.

The Plaintiff’s Claim

The plaintiff attempted to certify a class action on the basis that the defendants represented to consumers that a system access fee is charged 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”). He alleged that the Representation is false and amounted to a “deceptive act or practice” within the meaning of the British Columbia Business Practices and ConsumerProtection Act (“BPCPA”). The plaintiff sought declaratory and injunctive relief and a restorative order under the BPCPA.

The plaintiff also brought a claim for unjust enrichment and monies had and received against Bell. The plaintiff conceded that the claims for unjust enrichment and monies had and received against TELUS and Rogers and Fido (except for a short period of time in the case of Rogers and Fido) had to be stayed as a result of the Supreme Court of Canada’s decision in Seidel v. TELUS Communications Inc., which held that if the cellular telephone service contracts contained arbitration clauses, subscribers were precluded from litigating in respect of those contracts, except for under the BPCPA.

Certification Judge’s Refusal to Certify

With respect to the claim under the BPCPA, the certification judge held that the phrase “system access fee”, without more, arguably had 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. But he held that a restorative order was not available to the plaintiff because he had to establish a proprietaryinterest in the monies to be restored and there was no foundation for a pleading of such an interest. He also held that a class proceeding was not the preferable procedure for seeking a declaration or an injunction pursuant to the BPCPA.

The certification judge concluded that the claim for unjust enrichment was bound to fail because the contracts, which expressly provided for the payment of system access fees, were a juristic reason for the enrichment. Further, as there was no pleading of a failure of consideration it was plain and obvious that the plaintiff’s claim for monies had and received was also bound to fail.

The Court of Appeal’s Reasons for Judgment

The Court of Appeal held that the certification judge erred in concluding that there was a cause of action from the use of the phrase “system access fee”. The Court found that there was no foundation for the certification judge’s conclusion that the term had the capability of leading consumers to believe that the entirety of the fee was required to offset the defendants’ costs paid to government. The Court found unassailable the certification judge’s earlier finding that there was nothing in the word “fee” and the term “system access fee” that suggested that the fee would be remitted to government.

The Court of Appeal then dealt with the grounds of appeal raised by the plaintiff. The Court concluded that although the certification judge interpreted s. 172(3)(a) of the BPCPA too narrowly by importing into it a “proprietary nexus” requirement, he was correct in his conclusion that 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)(a) and thus the plaintiff’s claim for a restoration order was bound to fail. The Court also upheld the certification judge’s decision that the claims for unjust enrichment and monies had and received were bound to fail.

The full decision of the Court of Appeal is available online, and is indexed as 2015 BCCA 260.

Impact of Decision

This decision affirms that whether “the pleadings disclose a cause of action” is a substantive element of the test for certification. Cases can (and do) fail at that initial stage.