On September 9, 2014, the Supreme Court of Canada (the “Court”) issued a trilogy of decisions involving the application of Quebec’s Consumer Protection Act (“CPA”) fee disclosure rules to credit card agreements. In Bank of Montreal v Marcotte, Amex Bank of Canada v Adams and Fédération des caisses Desjardins du Québec, the Court held that (1) despite not having a direct cause of action against each defendant, the representative plaintiffs had standing, (2) conversion charges associated with foreign currency credit card transactions had to be disclosed pursuant to s. 12 of the CPA, and (3) Banks who violated these CPA fee disclosure rules could be liable for reimbursement  of  such  fees  and for punitive damages pursuant to s. 272 of the CPA.

In these cases, the representative plaintiffs were seeking relief against conversion charges incurred through foreign currency transactions completed with their credit cards. As the charges were not disclosed in the original credit card agreements, it was alleged that the conversion charges did not comply with the fee disclosure requirements under s. 12 of the CPA. The plaintiffs sought reimbursement of the charges and an award of punitive damages pursuant to s. 272 of the CPA.

The Court held that the plaintiffs had standing per Quebec’s Code of Civil Procedure, as they had a “sufficient interest.” The Court then stated that the constitutional doctrines of interjurisdictional immunity and paramountcy did not apply  so  as  to  prevent the application of Quebec’s CPA as the provisions considered  did  not  impair  or  conflict  with  federal laws. Rather, both the disclosure rules and remedial provisions of the CPA were found to be analogous to the substantive rules of contract and therefore were considered supportive of the federal banking scheme. Banks found in violation of the fee disclosure  rules were found liable for reimbursement and, in certain cases, punitive damages pursuant to s. 272 of the CPA.

The Court demonstrated a broad  interpretation  of the provinces’ possible jurisdiction over banks and other federally regulated businesses. Going forward, banks should consider whether provincial laws of general application, particularly consumer protection laws,  have  created  further  compliance  obligations. For example, Ontario’s Consumer Protection Act has provisions on disclosure rules governing credit  cards and credit agreements. Banks must reassess the sufficiency of their disclosure  in  such  agreements, as the Court has opened the possibility  that  banks may be subject to  requirements  and  remedies based  in  provincial  consumer  protection  legislation.

Daniel Everall