Lemer & Company represented the respondents in this appeal, who obtained mortgage loans from appellants, Household Finance (now owned by HSBC). Lenders are required to disclose the cost of borrowing and, in the required statutory forms, the appellants represented that the respondents were not being charged for legal fees. The respondents allege that they did in fact pay significant legal fees, which were hidden in the charge disclosed for title insurance premiums or fees. Title insurance companies arrange registration as well as the title insurance and the respondents allege that the appellants gained a substantial advantage in the marketplace by claiming their customers were not being charged for legal fees and then hiding them under title insurance premiums or fees.
Two of the proposed representative paid a total of $1,247 for two title insurance policies on mortgages of only $41,399.12 and $13,000. There was evidence at certification that the true cost of title insurance premiums would have been much less – only about $115 for each policy. The Court of Appeal affirmed certification of the two principal causes of action: claims under the Business Practices and Consumer Protection Act and breach of contract.
This decision deals with a couple of interesting points.
Whether or not conduct is deceptive is determined objectively under the It is not necessary to demonstrate that the deceptive act actually deceived a particular consumer. It is enough that it had the capability or tendency to mislead a consumer or even lead a consumer into an error in judgment. There are two means by which a class can obtain compensation. Section 171 provides a private cause of action in which the plaintiff must prove detrimental reliance and causation, leading to individual issues and often making 171 unsuitable for certification. In contrast, section 172 provides a public interest cause of action to anyone in the province, even if the plaintiff has no connection to the conduct in question:
“172 (1) The director or a person other than a supplier, whether or not the person bringing the action has a special interest or any interest under this Act or is affected by a consumer transaction that gives rise to the action, may bring an action in Supreme Court for one or both of the following:
(a) a declaration that an act or practice engaged in or about to be engaged in by a supplier in respect of a consumer transaction contravenes this Act or the regulations;
(b) an interim or permanent injunction restraining a supplier from contravening this Act or the regulations.
(2) If the director brings an action under subsection (1), the director may sue on the director’s own behalf and, at the director’s option, on behalf of consumers generally or a designated class of consumers.
(3) If the court grants relief under subsection (1), the court may order one or more of the following:
(a) that the supplier restore to any person any money or other property or thing, in which the person has an interest, that may have been acquired because of a contravention of this Act or the regulations…”
The Supreme Court of Canada in Seidel v. Telus, 2011 SCC 15 described section 172 as follows:
“ As to the statutory context, s. 172 stands out as a public interest remedy (i.e. it is available whether or not the self-appointed plaintiff “is affected by a consumer transaction that gives rise to the action”) as compared with s. 171 (where the plaintiff must be “the person who suffered damage or loss”). The difference in the personal stake (or lack of it) required of a plaintiff is scarcely accidental. Section 171 confers a private cause of action. Section 172 treats the plaintiff as a public interest plaintiff intended to shine a spotlight on allegations of shabby corporate conduct, and the legislative intent thereby manifested should be respected by the court…”
Nonetheless, the appellants argued that both detrimental reliance and causation have to be pleaded in a claim under section 172. We responded by noting that section 172 refers to money that “may have been obtained by suppliers”, indicating that the possibility of effecting consumers is all that is required. We also argued that section 172 contemplates that there is no need to plead reliance or causation because anyone in the province, even those with no connection to the conduct in question, and the Director of Trade Practices, have a cause of action. Obviously, the Director and other uninterested parties would not have suffered damage and would not have relied upon the deceptive conduct. The Court of Appeal agreed and allowed the section 172 claim to proceed in the absence of a plea of causation and detrimental reliance, stating (at paragraph 89) that the “complaint under s. 5 [the deceptive practices provision] opens the way to a claim under s. 172”.
The appellants also argued that, because they received funds for the cost of the title insurance/ legal fees but did not keep the funds and instead passed them to the title insurance company to pay for its services meant that they did not “acquire” the funds and should not be subject to a restoration order. The Court of Appeal agreed that whether the funds were “acquired” (or received under section 104 of the BPCPA, an alternatively pleaded provision) is a triable question.
The Court of Appeal remitted the certification decision back to the B. C. Supreme Court Judge who made the original certification decision to confirm that the class action is the preferable procedure to hear the two causes of action. We are optimistic the Certification Judge will do so.