Young v. Dollar Financial Group Inc., 2012 ABQB 601

Court of Queen ’ s Bench of Alberta Citation: Young v. Dollar Financial Group Inc., 2012 ABQB 601 Date: 20121011 Docket: 0301 16311, 0601 02908 Registry: Calgary Action No.: 0301 16311 Between: Gareth Young, as representative Plaintiff Plaintiff - and - Dollar Financial Group Inc., National Money Mart Company carrying on business under the name and style of “ Money Mart ” , Syd Franchuk, and Jeffrey Weiss Defendants Action No.: 0601 02908 And Between: H. Craig Day, as representative Plaintiff Plaintiff - and - National Money Mart Company, Dollar Financial Group, Inc., Money Mart Spruce Grove Ltd., Money Mart St.

Albert Ltd., Money Mart Leduc Ltd., Noralta Money Mart Ltd., 1008485 Alberta Ltd., 815028 Alberta Ltd., 632758 Alberta Ltd., and Money Mart Lloydminster Ltd. Defendants Brought under the Class Proceedings Act _______________________________________________________ Reasons for Judgment

of the Honourable Mr. Justice Alan D. Macleod _______________________________________________________ [ 1 ] Payday loans are controversial. As the name implies, they are structured to provide cash to employees who cannot make it from one payday to the next without assistance. They are secured by the next paycheque and as a result the loans are usually of less than two weeks in duration and the amounts are generally in the hundreds of dollars per transaction.

Some people say these loans are usurious because the interest and associated fees charged exceed 60% per annum and (they allege) contravene the Criminal Code of Canada, RSC 1985, c C-46. Others say that the service is not only legal but essential to those who do not have access to lines of credit and that the fees charged are in line with other services such as cheque cashing, etc. [ 2 ] Here, we have two proceedings. The first is a representative action commenced by Mr. Young prior to the Class Proceedings Act, SA 2003, c. C-16.5, on October 16, 2003. The second is a proceeding commenced by Mr.

Day under the Act on March 3, 2006. [ 3 ] Counsel for Messrs. Young and Day are seeking to have the actions consolidated and have them both proceed as class actions under the legislation. However, the Defendants’ counsel have insisted that these motions take place before the applications for consolidation and certification. These motions are for dismissal or a stay of both proceedings on the following grounds: 1. The Plaintiffs agreed in writing to proceed with mediation of their disputes against Money Mart. 2. The Plaintiffs agreed in writing to proceed with arbitration of their disputes against Money Mart. 3.

The Plaintiffs agreed in writing not to allow any joinder or consolidation of their claims with the claims of other persons or to participate in any class action either as a representative Plaintiff or as a member of a Plaintiff class. These applications come before me because I am the current Case Managing Judge for both actions. [ 4 ] The motions raise issues of arbitral autonomy and the court’s deference to the parties’ choice of forum for resolving disputes even in contracts of adhesion and even perhaps where the consequence of the choice is to stay a class action.

Also at issue is access to justice where provincial legislation provides for what the Plaintiffs refer to as “litigation in the public interest.” [ 5 ] Throughout argument Money Mart makes much of the differences in the two actions. While there are differences I believe they can be dealt with similarly under the principles as I see them. I am also of the view that this Court is the appropriate venue to decide the issues as they turn on the application of law. Facts [ 6 ] Although the Young action was initially commenced against a number of other parties Money Mart is the only remaining Defendant.

Young first became a Money Mart customer in November 2001 and has used Money Mart’s facilities both before and after the action was commenced. He has used several of Money Mart’s products and services including cheque cashing, Western Union, pre- paid MasterCards and short term loans called “Fast Cash Advances”.

[ 7 ] Between November 9, 2001 and the commencement of the Young action he obtained seven Fast Cash Advances from Money Mart and he signed a Fast Cash Advance agreement each time which included the following arbitration clause: Any claim, dispute or issue whether in contract, tort or otherwise, arising out of or in connection with the Loan or this Loan Agreement or any prior or future Loan agreement between the parties, including any issue regarding related fees, advertising, promotion or any oral or written statement or the absence thereof, default of payment, and/or the relationship between the parties shall, upon election by either party be resolved by binding arbitration in accordance with The Arbitration Act of Alberta as amended (the “Act”). [ 8 ] After commencement of the action, Young continued to utilize Money Mart’s services.

In those transactions the wording of the clauses was as follows: Alternative Dispute Resolution. The parties agree that “Claim” includes any claim, dispute or controversy arising out of or relating to this agreement or the construction thereof either directly or indirectly, whether in contract or in tort, or for restitution of whatever kind, and whether arising pursuant to a statute or regulation, or otherwise.

Mediation - The parties agree that, if any party requests mediation to resolve any Claim, then such mediation will be a pre-condition to any party commencing or continuing any court proceedings of whatever kind. The Claim will be referred to private and confidential mediation before a single mediator jointly appointed by the parties and the cost of the mediator will be paid by Money Mart. The parties may elect to proceed with mediation in person, in writing only, or electronically using an Internet or online mediation service jointly appointed by the parties.

Arbitration - In the event the parties are unable to resolve any such Claim by mediation, the parties agree to have the Claim determined by private and confidential arbitration before a single arbitrator jointly appointed by the parties and the cost of the arbitrator will be paid by Money Mart.

The parties may elect to proceed with the arbitration in person, in writing only, or electronically using an Internet or online arbitration service jointly appointed by the parties. [ 9 ] Because Young refused to participate in mediation or arbitration related to the claims Money Mart seeks a stay of the Young action pursuant to the agreements and pursuant to s. 7(1) of the Arbitration Act of Alberta , RSA 2000, c A-43. [ 10 ] In the first seven agreements entered into by Young he agreed as follows: No joinder or consolidation of claims with other persons are permitted without the consent of the parties hereto.

The wording changed in the later agreements to read as follows: Each party agrees that the joinder or consolidation of any ... action with the action or actions of other persons is not permitted and further agrees that it will not request and will oppose any such joinder or consolidation. [ 11 ] In the last three agreements Young agreed to the following clause: Each party also agrees not to commence or participate in any class action either as a representative Plaintiff or as a member of a Plaintiff class, and to opt out of any class action, if the class action involves, directly or indirectly, any Claim. [ 12 ] Young’s last Fast Cash Advance transaction with Money Mart was on November 10, 2006 and he has never repaid the $582.59 he borrowed and the cheque he delivered to Money Mart in repayment was returned “NSF”.

He currently owes that money

together with interest and fees related to the bounced cheque. [ 13 ] The Day action names a number of Defendants in his proposed class action. Mr. Day was a Money Mart customer between November 2000 and December 2005 during which period he used Money Mart’s cheque cashing service, purchased a debit card, and obtained 16 Fast Cash Advances. Prior to April 2003, the agreements mirrored the wording as the first agreements signed by Mr. Young. For all Fast Cash Advances obtained after April 2003, the wording followed that of the later agreements. And again, because Mr.

Day has refused to mediate or arbitrate and seeks to certify a class action, Money Mart and the other Defendants seek a stay of this action. The Legislative Context [ 14 ] I was informed by counsel that currently the situation is governed by new regulations under the Fair Trading Act , RSA 2000, c F-2, which regulate practices in these type of loan transactions. Moreover, amendments have been effected to the Criminal Code which provide that so long as these regulations are complied with these credit transactions are not subject to the relevant provisions of the Criminal Code of Canada .

Thus, the actions deal with the pre-regulated period. [ 15 ]

Section 7 of the Arbitration Act reads as follows: 7(1) If a party to an arbitration agreement commences a proceeding in a court in respect of a matter in dispute to be submitted to arbitration under the agreement, the court shall, on the application of another party to the arbitration agreement, stay the proceeding.

(2) The court may refuse to stay the proceeding in only the following cases: (

a) a party entered into the arbitration agreement while under a legal incapacity; (

b) the arbitration agreement is invalid; (

c) the subject-matter of the dispute is not capable of being the subject of arbitration under Alberta law; (

d) the application to stay the proceeding was brought with undue delay; (

e) the matter in dispute is a proper one for default or

summary judgment.

(3) An arbitration of the matter in dispute may be commenced or continued while the application is before the court.

(4) If the court refuses to stay the proceeding, (

a) no arbitration of the matter in dispute shall be commenced, and (

b) an arbitration that has been commenced shall not be continued, and anything done in connection with the arbitration before the court’s refusal is without effect.

(5) The court may stay the proceeding with respect to the matters in dispute dealt with in the arbitration agreement and allow the

proceeding to continue with respect to other matters if it finds that (

a) the agreement deals with only some of the matters in dispute in respect of which the proceeding was commenced, and (

b) it is reasonable to separate the matters in dispute dealt with in the agreement from the other matters.

(6) There is no appeal from the court’s decision under this section. [ 16 ] The Fair Trading Act at all material times, contained the following sections: 2(1) Any waiver or release by a person of the person’s rights, benefits or protections under this Act or the regulations is void. 13(1) When a consumer (

a) has entered into a consumer transaction, and (

b) in respect of that consumer transaction, has suffered damage or loss due to an unfair practice, that consumer may commence an action in the Court of Queen’s Bench for relief from that damage or loss against any supplier or any principal, director, manager, employee or agent of a supplier who engaged in or acquiesced in the unfair practice that caused that damage or loss.

(2) In an action under this section, the Court of Queen’s Bench may (

a) declare that the practice is an unfair practice; (

b) award damages for damage or loss suffered; (

c) award punitive or exemplary damages; (

d) make an order for (

i) specific performance of the consumer transaction, (ii) restitution of property or funds, or (iii) rescission of the consumer transaction; (

e) grant an order in the nature of an injunction restraining the supplier from engaging in the unfair practice;

(

f) make any directions and grant any other relief the Court considers proper.

(3) In determining whether to grant any relief under this

section and the nature and extent of the relief, the Court of Queen’s Bench must consider whether the consumer made a reasonable effort to minimize any damage resulting from the unfair practice and to resolve the dispute with the supplier before commencing the action in the Court.

(4) The Court of Queen’s Bench may award costs in accordance with the Alberta Rules of Court. 16 Despite any provision of this Act, neither a consumer nor the Director may commence or maintain an action or appeal under s. 13 to s. 15 if the consumer’s cause of action under those sections is based on a matter that the consumer has agreed in writing to submit to arbitration and the arbitration agreement governing the arbitration has been approved by the Minister. [ 17 ] Under that Act a “consumer transaction” was defined as: The supply of goods or services by a supplier to a consumer as the result of a purchase, lease, gift, contest or other arrangement. “Goods” was defined as: Any personal property that is used or ordinarily used primarily for personal, family or household purposes. “Services” was defined as: Any service offered or provided primarily for personal, family or household purposes including...

In January 2006, services was amended to include “any credit agreement” Credit agreement in the same legislation is broadly defined and includes the loans here. [ 18 ] Sections 2 and 3 of the Unconscionable Transactions Act , RSA 2000, c. U-2, reads: 2 When, in respect of money lent, the court finds that, having regard to the risk and to all the circumstances, the cost of the loan is excessive and that the transaction is harsh and unconscionable, the court may (

a) reopen the transaction, take an account between the creditor and the debtor and relieve the debtor from payment of any sum in excess of the sum adjudged by the court to be fairly due in respect of the principal and the cost of the loan; (

b) notwithstanding any statement or settlement of account or any agreement purporting to close previous dealings and create a new obligation, reopen an account already taken and relieve the debtor from payment of any sum in excess of the sum adjudged by the court to be fairly due in respect of the principal and the cost of the loan; (

c) order the creditor to repay any such excess if it has been paid or allowed on account by the debtor;

(

d) set aside either wholly or in part or revise or alter any security given or agreement made in respect of the money lent, and, if the creditor has parted with the security, order the creditor to indemnify the debtor. 3 The powers conferred by s. 2 may be exercised (

a) in an action or proceeding by a creditor for the recovery of money lent; (

b) in an action or on an originating notice brought by the debtor, notwithstanding any provision or agreement to the contrary and notwithstanding that the time for repayment of the loan or any instalment of the loan has not arrived; (

c) in an action or proceeding in which the amount due or to become due in respect of money lent is in question. [ 19 ]

Section 18 of the Judicature Act , RSA 2000, c J-2, provides: 18(1) No proceeding at any time pending in the Court shall be restrained by prohibition or injunction, but each matter of equity on which an injunction against the prosecution of the proceeding might formerly have been obtained either unconditionally or on any terms or conditions may be relied on by way of defence in the proceeding.

(2) Nothing in subsection (1) disables the Court from directing, if it thinks fit, a stay of proceedings in a proceeding pending before it, and any person, whether a party or not to any proceeding at any time pending in the Court (

a) who would have been entitled formerly to apply to a court to restrain the prosecution of it, or (

b) who may be entitled to enforce by attachment or otherwise a judgment, decree, rule or order contrary to which all or part of the proceedings may be taken, may apply to the Court for a stay of proceedings in the proceeding either generally or so far as might be necessary for the purposes of justice, and the Court shall on that application make any order that will be just. [ 20 ] Section 5(3)(

f) addresses this Court’s power to prevent a multiplicity of proceedings. That

section states:

(3) For the purpose of removing any doubt, but not so as to restrict the generality of subsections (1) and (2), it is declared that the Court has the like jurisdiction and powers that by the laws of England were, on July 15, 1870, possessed and exercised by the Court of Chancery in England in respect of (...) (

f) preventing the multiplicity of actions. Overview of the Parties ’ Positions [ 21 ] Throughout their arguments counsel for the Plaintiffs and counsel for Money Mart each put their own spin on the evidence.

Counsel for the Plaintiffs emphasized evidence which he says points to the reason why Money Mart has inserted an elective arbitration clause in its standard form payday loan agreement and not in any of its other standard form service agreements. He alleges that the reason why Money Mart has never elected to arbitrate a dispute with one of its defaulting borrowers is that Money Mart has no real interest in arbitration as a means of dispute resolution.

Rather, the arbitration clause is designed to serve one purpose only: to provide Money Mart with a mechanism to shield itself from any proposed class action considering the legality of the cheque cashing fees it charges in connection with its payday loan transactions and thereby shield itself from liability arising out of its criminal conduct.

It is alleged that all of the charges and fees are included within the broad definition of interest under the Criminal Code and that Money Mart is in breach of s. 347(1) of the Code . [ 22 ] For their part, counsel for the Defendants say that s. 347 of the Criminal Code was never intended to be consumer protection legislation but was designed to deal with loan sharking as opposed to Fast Cash Advances. It says that none of the Fast Cash Advances have actually been found to be contrary to s. 347 of the Criminal Code .

Moreover, the vast majority of any problems between borrowers and Money Mart are resolved informally without the necessity of any legal proceedings and that the current regulatory regime confirms the validity of payday loans as a legitimate service which is now the subject of regulation. [ 23 ] The Plaintiffs’ response is that Money Mart’s resolution of problems with its debtors is no more than collection and the small amounts involved per debtor mean that this issue will never get before the courts unless it is by way of class action. [ 24 ] That consideration, say counsel for the Defendants, is not one that I am entitled to take into account.

The fact that the consequence of the stay application means that the class action will not be certified is totally beside the point. In support of that counsel cite a number of cases including recent cases from the Supreme Court of Canada. The Defendants’ claim that an arbitration agreement precludes a class action even if the relevant certification test is met.

They say further that clauses in consumer contracts in which the consumer waives any right to participate in a class action are enforceable and that any challenges to the validity or applicability of arbitration agreements should be raised before the arbitrator at first instance.

While the Plaintiffs raised the Unconscionable Transactions Act , the Defendants say that it is for the arbitrator to determine whether or not the transaction is unconscionable. [ 25 ] The Defendants say that the Arbitration Act and the case law set out by the Alberta Court of Appeal and the Supreme Court of Canada require me to refer this matter to arbitration as a condition precedent to litigation. The Plaintiffs say that the Fair Trading Act and the cases of Ayrton v. PRL Financial (Alta.) Ltd., 2004 ABQB 787 (“ Ayrton ”), and Seidel v.

Telus Communications Inc., 2011 SCC 15 (“ Seidel ”), support dismissal of the Defendants applications. Issues [ 26 ] I am grateful for the written and oral submissions of counsel. I found them both useful and thorough. [ 27 ] I formulate the issues as follows: 1. What are the effects of the arbitration and mediation clauses and the provisions of the Arbitration Act and other Alberta legislation such as the Fair Trading Act , the Unconscionable Transactions Act and the Judicature Act ? 2.

Do the clauses dealing with joinder of actions or class actions justify the granting of a stay or should I defer a decision on this question as suggested by the Plaintiffs? The Arbitration Clauses [ 28 ] Like other provinces, Alberta has legislation providing for the stay of proceedings in Court where the parties to a contractual dispute have chosen to resolve disputes by arbitration.

This legislation was passed to further the sound policy of encouraging parties to commercial contracts to resolve disputes in an expeditious manner before arbitrators rather than through expensive and lengthy court proceedings where the parties had already agreed to arbitration.

[ 29 ] More recently it has been increasingly common to include arbitration and mediation clauses in consumer contracts which frequently (as they are in this case) are form contracts of adhesion. Canadian Courts have recognized how mandatory arbitration clauses in consumer contracts are often viewed as detrimental to the consumer. For example, Sharpe J.A. in Griffin v.

Dell Canada Inc. , 2010 ONCA 29 , at para. 30 said: The seller’s stated preference for arbitration is often nothing more than a guise to avoid liability for widespread low-value wrongs that cannot be litigated individually but when aggregated form the subject of a viable class proceeding...When consumer disputes are in fact arbitrated through bodies...that sell their services to corporate suppliers, consumers are often disadvantaged by arbitrator bias in favour of the dominant and repeat- player corporate client...

This quote was referred to by the Supreme Court of Canada in the recent case of Seidel at para. 1 . [ 30 ] After citing that paragraph however, Binnie J. in that same case summarized the Supreme Court’s approach to arbitration agreements at para. 2 as follows: The choice to restrict or not to restrict arbitration clauses in consumer contracts is a matter for the legislature. Absent legislative intervention, the courts will generally give effect to the terms of a commercial contract freely entered into, even a contract of adhesion, including an arbitration clause.

At para. 42, Binnie J. explained the court’s earlier decisions in Dell and Rogers Wireless : (T)he relevant teaching of Dell and Rogers Wireless is simply that whether and to what extent the parties’ freedom to arbitrate is limited or curtailed by legislation will depend on a close examination of the law of the forum where the irate consumers have commenced their court case.

Dell and Rogers Wireless stand, as did Desputeaux , for the enforcement of arbitration clauses absent legislative language to the contrary. [ 31 ] Accordingly, in evaluating whether or not an arbitration clause will trump other considerations I am to examine the legislation of this province only some of which is contained in the Arbitration Act . [ 32 ] In addition, I am not without some judicial precedent. LoVecchio J. of this Court considered a similar situation in Ayrton .

In that case, which also involved a challenge to payday loan agreements, the Defendants similarly applied to stay the action because of the arbitration clause. The Plaintiff argued that he had a statutory right of action because of the Fair Trading Act and the failure of the defendants to comply with s. 16 of the Fair Trading Act (getting approval for the arbitration clause) rendered the arbitration provision in question “invalid”.

LoVecchio J. concluded that these transactions were “consumer transactions” within the meaning of the Fair Trading Act and that s. 13 provided a specific statutory right of action to the Plaintiff in that case.

He found that under s. 16 the Plaintiff’s action was not maintainable if the written agreement to arbitrate had been approved by the Minister which it had not. [ 33 ] Similarly, there is no evidence in this case that the arbitration clause was approved by the Minister under the Fair Trading Act and correspondence received over the summer from counsel for the Plaintiffs enclosed material which confirmed that it was not approved.

LoVecchio J. concluded that if the arbitration clause had not been approved in accordance with s. 16 it could not be used to stay an action brought by the Plaintiff under s. 13 of the Fair Trading Act . [ 34 ] I find myself in agreement with Justice LoVecchio as to the working of ss. 13 and 16. The Fair Trading Act is consumer protection legislation and its provisions are to be given a large and liberal construction with that objective in mind. Many have commented on the use of arbitration and mediation clauses to avoid class actions and several lawmakers have reacted to that criticism in different ways.

The inescapable conclusion is that the Alberta Legislature wanted the Minister to monitor consumer contracts and approve only those arbitration clauses which were not susceptible to that criticism. [ 35 ] Accordingly, I agree with Justice LoVecchio that s. 13 of the Fair Trading Act gives the consumer a remedy in the Court of

Queen’s Bench for relief if she/he has suffered damage due to an unfair practice and it gives the Court of Queen’s Bench discretion withrespect to remedy beyond that of the issue between the supplier and customer.

Section 16 prevents commencement or maintenance of anaction under s. 13 if the consumer has agreed to submit to arbitration and the agreement has been approved by the Minister.

Section 2provides that a person cannot waive the rights, benefits or protections under this Act. Justice Binnie in Seidel at para. 25 noted that anumber of other provincial legislatures have intervened in the marketplace with respect to arbitration clauses in consumer contracts andnoted that s. 16 of the Fair Trading Act in Alberta subjects consumer arbitration clauses to ministerial approval.

I agree that the AlbertaLegislature has intervened and where the Minister has not approved the arbitration clause, that clause cannot be set up to prevent or stayan action under s. 13. [36] I also agree with Justice LoVecchio that it is not necessary to determine whether the arbitration provisions are “invalid”. TheArbitration Act is to be read subject to the Fair Trading Act and where the arbitration clause in question has not been approved asrequired by s. 16, the arbitration clause cannot preclude an action under s. 13.

The Arbitration Act recognizes that Alberta law maypreclude such matter from being capable of arbitration under s. 7(2)(c). [37] The Defendants say that Ayrton is largely beside the point because neither Mr. Day nor Mr.

Young have pleaded sections ofthe Fair Trading Act which are covered by s. 16 and they have not even referred to s. 13 in their pleadings. [38] It is clear from the argument before me in this application that the Plaintiffs will attempt to bring themselves within s. 13 ofthe Fair Trading Act and they have argued that the facts they have alleged put them squarely within its scope because they have suffereddamage or loss due to “an unfair practice”.

I agree that if the Plaintiffs establish facts that bring them within the scope of s. 13 they mayinvoke it. [39] But the Defendants also argue that most, if not all, of the transactions subject to litigation by Young and Day occurred prior toJanuary 17, 2006 which was the date credit agreements were included in the definition of services under the Act.

Accordingly, prior tothis time the transactions between the Defendants and the Plaintiffs did not constitute consumer transactions within the meaning of theFair Trading Act and no action is maintainable under it. [40] To assess this argument it is important to analyse the context. Prior to January 2006 consumer transactions covered the supplyof goods or services by a supplier to a consumer. Goods were defined as any personal property that is used or ordinarily used primarilyfor personal, family or household purposes.

Services were defined as “any service offered or provided primarily for personal, family orhousehold purposes including...”. [41] In January 2006 the government brought in a regulatory scheme governing credit agreements and thus included creditagreements in its definition of services which also made it a consumer transaction. [42] The Defendants argue that those credit agreements could not have come within the definition of consumer transaction prior toJanuary 1, 2006. The Plaintiffs say that this argument is precluded by s. 37(2) of the

Interpretation Act, RSA 2000, c. 1-8, as explainedby the Supreme Court of Canada in United States of America v. Dynar, (SCC), [1997] 2 S.C.R. 462. In that case, theCourt considered similar provisions in the federal

Interpretation Act, R.S.C., 1985, c. I-21, holding at paras. 45 and 46: But in our view this argument is misconceived. What legal commentators call "subsequent legislative history" can cast no light on theintention of the enacting Parliament or Legislature. At most, subsequent enactments reveal the

interpretation that the present Parliamentplaces upon the work of a predecessor. And, in matters of legal

interpretation, it is the judgment of the courts and not the lawmakers thatmatters. It is for judges to determine what the intention of the enacting Parliament was. Parliament itself recognized as much, when, in the

Interpretation Act, R.S.C., 1985, c. I-21, s. 45(3), it declared: The repeal or amendment of an enactment in whole or in part shall not be deemed to be or to involve any declaration as to the previousstate of the law. [43] I agree. But also, as a matter of common sense, the Legislature ensured that its extensive additions to the Act dealing with

credit agreements were included within the definition of services. That does not mean however, that the payday loans before this Court did not fall within the earlier broad definition of goods or services or both. Obviously, the original legislation couched the definition of goods and services in very broad terms with the result that almost every transaction involving goods or services for personal consumption was included. The Defendants suggest that counsel in Ayrton made a grave error in not arguing that the transactions in that case were not consumer transactions. I disagree.

In my view, it was obvious to everyone that the payday loans before the Court fit within the definition consumer transaction. I have no difficulty in concluding that the

definitions of consumer transaction and services as it read prior to the amendment in January 2006 were broad enough to include and did include the payday loans referred to in the Day and Young actions. [ 44 ] I therefore agree with the decision in Ayrton and I see nothing in the authorities cited to me, including the Supreme Court decision in Seidel , which would suggest that I not follow Ayrton . [ 45 ] The Defendants argue that the Supreme Court in Seidel emphasized the fact that s. 172 of the B.C. legislation which was under consideration had much more of a public interest component.

That is true although s. 13 does have a public interest component inasmuch as the Alberta Court of Queen’s Bench may declare that the practice is an unfair practice which presumably has consequences beyond the private action and may grant an injunction preventing the supplier from engaging in an unfair practice. But more importantly, the B.C. Act did not have a provision similar to our s. 16 which requires ministerial approval of the arbitration clause which the defence seek to invoke. The Defendant’s application to stay these proceedings based on the written arbitration clauses is dismissed.

Unconscionable Transactions Act [ 46 ] This legislation provides the Court, as defined in the Act with very broad powers to re-open transactions and order a variety of remedies in cases where the Court determines that the transaction is harsh and unconscionable.

It is a unique remedy which arises in a particular fact situation and it is to be noted that in s. 3 the powers conferred on the Court may be exercised in an action or proceeding brought by the debtor “notwithstanding any provision or agreement to the contrary...”. [ 47 ] The legislation is consumer protection legislation designed to protect borrowers from harsh and unconscionable transactions. In my view, the extraordinary remedies and powers conferred on the Court by s. 2 should not be exercised by anybody other than the Court as defined in the Act.

If I am wrong in that conclusion it is also my view that neither an arbitration nor a mediation clause can preclude or prevent a debtor from accessing the Court under s. 3 (b). [ 48 ] Accordingly, the application to stay proceedings brought under the Unconscionable Transactions Act is dismissed. Mediation clauses [ 49 ] An application to stay these actions based on a mediation clause must necessarily invoke this Court’s jurisdiction to stay proceedings under the Judicature Act .

Section 18 gives this Court jurisdiction to stay proceedings on occasion if the Court thinks it just. Section 5(3)(

f) confirms this Court’s power to prevent a multiplicity of proceedings. [ 50 ] Given my conclusion as to the purpose of ss. 13 and 16 of the Fair Trading Act it would make little sense to grant a stay based on the mediation clauses advanced by Money Mart. The application to stay based on the mediation clauses is dismissed.

The Effect of the No Class Actions clause [ 51 ] The Plaintiffs argue that I ought not to decide this issue but postpone any consideration of it until the application for certification. [ 52 ] However, as I understand the position of the Defendants, because the Plaintiffs have contracted out of class action proceedings and have in fact agreed not to prosecute or participate in a class action proceeding, that creates a substantive obligation which precludes them from participating in a certification application under the Class Proceedings Act .

[53] In Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46 , [2001] 2 S.C.R. 534 (“Dutton”), at paras. 26to 29, the Supreme Court of Canada identified the public policy factors engaged by Class Proceedings Legislation. First, class actionspromote judicial economy by preventing a multiplicity of proceedings. Second, class actions promote access to justice by enabling coststo be divided across a large number of plaintiffs.

Finally, class actions promote justice by forcing wrongdoers to account for the full costsof their conduct. [54] The Defendants argue that the certification of class proceeding is merely procedural and it does not create any substantiverights. With respect, I do not see the benefit of arguing the issue of substantive versus procedural rights. In this context the statutory rightis not less worthy than the contractual obligation. The Class Proceedings Act is all about adopting a particular procedure forimplementing the social policy referred to by the Supreme Court in Dutton.

The Court is directed under the legislation to certify classactions if the Court is satisfied as to the matters referred to in s. 5(1). If Plaintiffs are a member of a class as defined by the Act they maycommence proceedings pursuant to the Act and this may, after the appropriate hearing, result in a certification. The Legislature hasspoken. If a dispute has a number of plaintiffs with common issues and it meets certain criteria, it is to proceed as a Class Action. [55] As indicated at the outset, individual payday loans are small and the interest payments on each individual transaction amountto very little.

Based on what I have seen thus far in these proceedings I do not know whether or not the Plaintiffs can succeed inconvincing a court that the transactions contravene the Criminal Code but there can be little doubt that the issue will never be litigatedunless such claims are aggregated. Moreover, as a matter of common sense I cannot see any purpose for the existence of class actionclauses in this case except to avoid the prospect of a class action. [56] In my view it is not just to allow the Defendants to avoid the possibility of certification based on these clauses.

I dismiss theapplication. [57] As Perell J. says in 2038724 Ontario Ltd. v. Quizno’s Canada Restaurant Corp., (ON SC), [2008] O.J. No.833, there may well be cases where the clause can be argued as a factor against certification. The application for certification is notbefore me and I make no comment as to the suitability of this case for certification. I do say, however, that the existence of the classaction waiver clause shall not operate in this case to prevent an application for certification from being made.

The Residual Claims [58] I have dismissed the applications for a stay based on the class action clauses and the mediation clauses. With respect to thearbitration clauses, I have dismissed the applications insofar as they relate to claims advanced under the Fair Trading Act and theUnconscionable Transactions Act. The Defendants argue that any residual claims which would include the claim for unjust enrichmentshould be stayed. It would appear that I have the discretion to do that under s. 7(5) of the Arbitration Act. I may do so if it is reasonableto separate the matters in dispute for such a purpose.

I choose not to exercise my discretion to stay any part of the Plaintiff’s proceedings.They are inextricably related. These actions raise important issues and I think there is merit in having them dealt with in one forum. It isessential that we avoid the potential of inconsistent findings or inconsistent results. If the matter does proceed, the history of thislitigation makes it very likely that all appeals will be exhausted. [59] Accordingly, the application by the Defendants for a stay is dismissed in its entirety. The Plaintiffs are entitled to costs whichmay be spoken to.

Heard on the 9, 10, 11th days of May, 2012. Dated at Calgary, Alberta this 11th day of October, 2012.

Alan D. Macleod J.C.Q.B.A. Appearances: Paul R. Bennett / Mark W. Mounteer Hordo Bennett Mounteer LLP Craig Gillespie Cuming & Gillespie Co-Counsel for the Plaintiff, Gareth Young, in Action No. 0301-16311 and the Plaintiff, H. Craig Day, in Action No. 0601-02908 John P. Brown / Sean S. Smyth, Q.C. McCarthy Tetrault LLP Counsel for the Defendant, National Money Mart Company in Action No. 0301-16311 and National Money Mart Company, Money Mart Spruce Grove Ltd., Money Mart St.

Alberta Ltd., Money Mart Leduc Ltd., Noralta Money Mart Ltd., and Money Mart Lloydminster Ltd. in Action No. 0601-02908 Shanna Hunka Bishop & McKenzie LLP Counsel for the Defendant, Dollar Financial Group, Inc., in Action No. 0601-02908 James K. McFadyen, Q.C. Parlee McLaws LLP Counsel for the Defendants, 1008485 Alberta Ltd., 815028 Alberta Ltd., and 632758 Alberta Ltd. in Action No. 0601-02908