On March 22, 2018, the Supreme Court of Canada granted leave to appeal the Ontario Court of Appeal’s decision in Wellman v. TELUS. The Supreme Court’s decision to grant leave presents an opportunity for further guidance regarding the interplay between arbitration clauses and class actions in certain contexts, and in particular where non-consumer claims form part of the proposed class proceeding.
As we have previously written, the class proceeding involved claims by consumer and business customers against the defendants TELUS Communications Inc. and related entities (the “Defendants”) for allegedly overcharging customers without disclosing the billing practice. The contract between the Defendants and the customers contained standard terms and conditions, including a mandatory arbitration provision.
While the Defendants conceded that the arbitration clause was unenforceable against consumers by virtue of the statutory protections of the Ontario Consumer Protection Act, the Defendants sought a partial stay (pursuant to s. 7(5) of the Ontario Arbitration Act) in respect of claims asserted by business customers on the basis that such claims were not governed by the Consumer Protection Act.
Justice Conway refused to grant the partial stay and certified the class, finding that it would be unreasonable to separate the business customer claims from the consumer claims.
Ontario Court of Appeal’s decision
The Ontario Court of Appeal dismissed the appeal of Justice Conway’s decision. Justice van Rensburg, writing for the majority, found that the Ontario Court of Appeal’s decision in Griffin v. Dell Canada Inc., 2010 ONCA 29 (where a partial stay in favour of arbitration was refused) had not been overtaken or altered by the Supreme Court’s decision in Seidel v. TELUS Communications Inc., 2011 SCC 15 (where a partial stay was granted) – as Griffin was decided in the context of Ontario’s legislative framework regarding arbitration and consumer protection, while Seidel was decided in the context of British Columbia laws.
However, in a concurring decision by Justice Blair, while he agreed that Griffin was not overtaken by Seidel and that Griffin was still binding, he expressed his reservations about Griffin’s correctness. Notably, he raised concerns that litigants might be able to “sidestep” the substantive right to arbitrate non-consumer claims by adding consumer claims – which, by virtue of Ontario’s Consumer Protection Act, cannot be stayed in favour of arbitration – and then bundling those claims under the mantle of a class proceeding. Justice Blair noted that the court in Griffin did not address this concern.
In light of Justice Blair’s commentary in his concurring decision, the Supreme Court’s decision to grant leave to appeal the Court of Appeal’s decision presents an opportunity for further guidance on the interaction between arbitration clauses and class proceedings in certain contexts. The case presents a number of broader policy implications related to the interaction between consumer and non-consumer claims (including whether litigants can sidestep the substantive right to arbitrate non-consumer claims), as well as between ss. 7(1) and 7(5) of the Arbitration Act (i.e., the mandatory stay and partial stay provisions, respectively).
We will continue to monitor and report on any developments in this matter.