In a decision on a trial of the common issues – a rare occurrence in Ontario proportionate to the number of class actions or proposed class actions in existence – a plaintiff class of former college students succeeded against the George Brown College of Applied Arts and Technology (George Brown) on claims for negligent misrepresentation and breach of the Consumer Protection Act (CPA). Justice Belobaba of the Ontario Superior Court of Justice issued his oral decision from the bench following the conclusion of the common issues trial and released his written reasons on November 16, 2012.

BACKGROUND

The class was comprised of 118 former students in the International Business Management Program (the Program) for the semesters commencing in September 2007, January 2008 and September 2008. Two-thirds of the students were foreign students who have paid tuition fees of almost $11,000; domestic students paid approximately $3,000 in tuition fees.

The principal allegation in the claim was that George Brown misrepresented the benefits and credentials that the Plaintiffs would receive upon successfully completing the Program. Specifically, the 2007-2008 and 2008-2009 course calendars misrepresented that the Program “provides students with the opportunity to complete three industry designations/certifications, in addition to the George Brown College Graduate Certificate” (the “Representation”).

Contrary to the Representation and other similar statements made by George Brown and its representatives, the students would not obtain any industry designations upon completion of the Program, and in fact would not even be eligible to write the examinations mandated by the various industry associations.

The Plaintiffs advanced three causes of action in the claim: negligent misrepresentation, breach of the CPA and breach of contract. While Justice Strathy certified nine common issues relating to the causes of action pleaded, Justice Belobaba’s decision is principally focused on the following two issues: (i) was the Representation false, and (ii) does the CPA apply in the circumstances.

THE DECISION

The Benefits of the Program were Falsely Represented

Justice Belobaba resolved the issue of the veracity of the Representation by evaluating the meaning of the phrase “the opportunity to complete.” The Plaintiffs argued that this phrase meant that “if they completed the Program, they would graduate not only with the GBC graduate certificate but also with the three industry designations/certifications “in addition to” the GBC graduate certificate…” In contrast, George Brown asserted that the Program was “only providing a preparatory platform for the future completion of the three listed designations; that all that was being offered was “an opportunity”, that is “a chance to advance to complete” the industry designations…”.

As a matter of interpretation, Justice Belobaba favoured the Plaintiffs’ interpretation over George Brown’s, stating that on a plain reading, the Plaintiffs’ interpretation of the Representation was “completely reasonable.” His Honour also held that if the Program was only intended to provide students with a preparatory platform for the future completion of the industry designations, as asserted by George Brown, it could have said so in the course calendars, as it did for other business programs offered in the same course calendar.

George Brown also argued that the Plaintiffs should have been alerted to the fact that the industry designations were not part of the Program (i) because the “certification box” for the Program, which tells the course calendar reader what degree, diploma or certificate will be awarded if the program is successfully completed, only listed the college graduate certificate, and (ii) a diligent student would have researched the various industry associations and realized from their websites that George Brown could not possibly provide three designations upon completion of an eight-month program. Justice Belobaba rejected both of these submissions.

With respect to the “certification box” argument, His Honour noted that there was no reason to expect non-college accreditations to be listed, and in fact, even in those programs where a non-college accreditation was awarded, the non-college accreditation was not listed in the “certification box.” As to the allegation that a diligent student should have conducted additional independent research, His Honour effectively held that such expectation was unreasonable in the circumstances, particularly as the course calendar specifically stated that they would receive the industry designations by taking the Program.

Based on the evidence before him, Justice Belobaba applied a more nuanced interpretation, and ultimately concluded that the Representation was that the Program provided students with an opportunity to complete all of the requirements for the three industry designations, except for the writing of the final examinations – that is, the students would still be required to pay for and write the industry association’s final exam and pay the annual membership fees. His Honour found that, on the facts at hand, the Representation was clearly false and misleading.

Students are “Consumers” under the CPA

The CPA prohibits unfair practices in the course of consumer transactions, including the making of false, misleading or deceptive representations. The CPA also provides a specific prohibition against representing that a person who is supplying goods or services has “sponsorship, approval, status, affiliation or connection” that the person does not have. Having determined that the Representation was false, and that George Brown was not authorized to confer the industry designations, or even award partial credit towards those designations, the critical question was whether the Plaintiffs, as students, were subject to the protection of the CPA.

Pursuant to the CPA, a “Consumer” is “an individual acting for personal, family or household purposes and does not include a person acting for business purposes.” This, the penultimate question was whether a student who takes business courses is acting for personal purposes or business purposes.

Relying on the basis of first principles, statutory history, judicial interpretation and recent legislative intention, Justice Belobaba definitively concluded that students are “consumers” of education services for the purposes of the CPA.

The principal propositions and policies underlying His Honour’s conclusion are that: (i) consumers of educational services are as much in need of protection against unfair practices as are purchasers of any other services, (ii) a college student taking courses to get a better job or start his own business is still a “consumer” and does not fall within the business exclusion, (iii) relevant jurisprudence has held that a purchaser is acting for a “business purpose” if he purchases a product that will be used primarily in the course of carrying on business, or for the purpose of tradition that product, or is acting in a professional or business capacity, and (iv) a person who hopes to get a better job upon graduation is not acting in a professional or business capacity at the time of the transaction.

Breach of Contract

The impugned Representation is not a term of the actual contracts between the Plaintiffs and George Brown, but is a pre-contractual representation in the course calendar. The Plaintiffs did not plead collateral contract, and were unable to establish that the Representation was implied term of the contract because its meaning was disputed.

CONCLUSION

Having determined that George Brown negligently misrepresented the benefits the Plaintiffs would receive upon successfully completing the Program, the next steps in the litigation will include an assessment of the Plaintiffs’ individual reliance on the Representation in order to establish liability for negligent misrepresentation, and an assessment of damages for both negligent misrepresentation (assuming reliance is established) and breach of the CPA.

It should be noted that Justice Belobaba specifically stated at the outset of his reasons that “findings should not be taken out of context” and are not intended to impugn the quality or integrity of George Brown College, its teaching faculty or its administration.”