Raquel v. Academyone Learning Ltd. Date:, 2015 BCPC 457

Citation: Raquel v. Academyone Learning Ltd. Date: 20150617 2015 BCPC 457 File No: 14-49570 Registry: Vancouver IN THE PROVINCIAL COURT OF BRITISH COLUMBIA Small Claims BETWEEN: PAUL RAQUEL AND ROSARIO RAQUEL CLAIMANT AND: ACADEMYONE LEARNING LTD. DEFENDANT REASONS FOR JUDGMENT OF HIS WORSHIP B. WALLACE Counsel for the Claimant: T. Grazier Counsel for the Defendant: M. Siren Place of Hearing: Vancouver , B.C.

Date of Hearing: April 8, 2015 Date of Judgment: June 17, 2015 [ 1 ] About two years ago AcademyOne Learning Ltd. (the Defendant), sold to Mr. and Mrs. Raquel (the Claimants), in a consumer transaction, access to the Claimants’ young children, the Defendant’s educational software for 60 months.

By the terms, the Claimants agreed to the direct deductions from their bank account of $168.21 per month for 60 months, to cover the $6,362.40 stated fee and taxes, plus the 19.9% annual interest charged on the fee over five years. [ 2 ] The evidence satisfies me that the Defendant used undue pressure to persuade the Claimants to agree to the consumer transaction to commit to pay for access to the software at an exorbitant price. The consumer also has very limited basis and limited time in which the Claimants can withdraw from the consumer transaction.

In my conclusion, the terms and conditions are “so harsh [and] adverse as to be inequitable.” Except for a short period of time, the Claimants’ children did not use the educational software. As a result, the Claimants sought to cancel the transaction, but the Defendant and the finance company, have refused to allow the Claimants to discuss with them the money back guarantee or to cancel the transaction. [ 3 ] I calculate the Claimants have had $168.21 withdrawn from their bank account under this consumer transaction and financing each month from April 16, 2013 to June 16, 2015, for a total of $4,541.67.

The amount is scheduled to have $168.21 withdrawn for any additional months for which the fee and interest is charged. The Claimants also paid $100 in an initial down payment. All of the amounts paid by the Claimants to the Defendant are to be returned to them forthwith. No further amounts may be charged. The consumer transaction is hereby terminated and is not enforceable against the Claimants.

STATUTORY FRAMEWORK [ 4 ] The Business Practices and Consumer Protection Act , SBC 2004, C. 2., (the “ Act ”) requires me to consider for this consumer transaction, “all of the surrounding circumstances of which the [Defendant] knew or ought to have known” (s. 8(2)) and whether the Defendant “subjected” the Claimants “to undue pressure to enter into the consumer transaction” (s.9(3)). Here are the provisions respecting and remedies from unconscionable acts and practices that I find apply here: Unconscionable acts or practices 8

(1) An unconscionable act or practice by a supplier may occur before, during or after the consumer transaction.

(2) In determining whether

an act or practice is unconscionable, a court must consider all of the surrounding circumstances of which the supplier knew or ought to have known.

(3) Without limiting subsection (2), the circumstances that the court must consider include the following: (

a) that the supplier subjected the consumer or guarantor to undue pressure to enter into the consumer transaction; (

b) that the supplier took advantage of the consumer or guarantor's inability or incapacity to reasonably protect his or her own interest because of the consumer or guarantor's physical or mental infirmity, ignorance, illiteracy, age or inability to understand the character, nature or language of the consumer transaction, or any other matter related to the transaction; (

c) that, at the time the consumer transaction was entered into, the total price grossly exceeded the total price at which similar subjects of similar consumer transactions were readily obtainable by similar consumers; (d) ... (

e) that the terms or conditions on, or subject to, which the consumer entered into the consumer transaction were so harsh or adverse to the consumer as to be inequitable; (f) .... Prohibition and burden of proof 9

(1) A supplier must not commit or engage in an unconscionable act or practice in respect of a consumer transaction.

(2) If it is alleged that a supplier committed or engaged in an unconscionable act or practice, the burden of proof that the unconscionable act or practice was not committed or engaged in is on the supplier. Remedy for an unconscionable act or practice 10 (1) ... if an unconscionable act or practice occurred in respect of a consumer transaction, that consumer transaction is not binding on the consumer or guarantor. ...

[ 5 ] I find that in the consumer transaction described above, the Defendant has “commit[ted] an unconscionable act or practice” which is prohibited by S.9(1). The consumer transaction is therefore not binding on the Claimants. [ 6 ] The Defendant is entirely responsible to pay the amount owing from this case to the Claimants, and to terminate the transaction.

The Defendant has failed to meet the burden of proof on it that it did not commit or engage in unconscionable conduct in arranging and negotiating the consumer transaction. [ 7 ] As a result, I order that the Defendant pay to the Claimants the total amount the Claimants have paid in the consumer transaction, including both the $100 down payment and the monthly payments, that the Defendant also pay to the Claimants their court fees of $180 plus court ordered interest from April 16, 2013 until payment.

The Claimants’ obligations to make any future payments related to this consumer transaction is cancelled, and neither the consumer transaction nor the financing arrangement is binding on the Claimants (the Act , s. 10(1)). [ 8 ] I find that the cost of and interest charges related to this consumer transaction are unconscionable. It is unconscionable for the Defendant not to permit cancellation and unconscionable for the Defendant and the finance company to impose and enforce an obligation to pay outrageous interest.

The Defendant and the finance company both knew or ought to have known the unconscionable nature of this case. DETAILS [ 9 ] The Claimants have brought this action against the Defendant to claim repayment by the Defendant of all amounts they have paid to the Defendant and to Crelogix Acceptance Corporation, pursuant to Purchase Order 2546 for the Math and English Wiz Program (“Purchase Order”). They entered the transaction with the Defendant and by the related consumer promissory note in which the Defendant identified Crelogix Acceptance Corporation as financing the contract (the “Consumer Promissory Note”).

The Claimants also ask that the court rescind the Purchase Order and the Consumer Promissory Note, and end any obligations the Claimants may have under either. [ 10 ] The Claimants’ evidence at the hearing and written includes that: a. The Defendant’s salesperson misrepresented to them that the contract entitled them to an unconditional one-year money back guarantee entitling them to a refund and to cancel the contract; b. They did not understand the contract; c. They have limited English capabilities; d. Their children were in grade six and grade one; and e.

They could not possibly appreciate whether the price and terms were equitable or exceeded the price of similar subjects. [ 11 ] The Defendant’s salesperson filed an affidavit but did not attend the hearing and was not called to give evidence. The Claimants did give direct evidence and were cross-examined for the Defendant. I accept the Claimants’ evidence and the concerns set out in the previous paragraph on having been misrepresented by the Defendant’s salesperson on the consumer transaction. [ 12 ] Defendant’s counsel says that: a.

The Claimants agreed to pay the purchase price of $6,462.40 for the contract, plus the financing costs imposed by Crelogix Acceptance Corporation, which amount to total payments of a $100 deposit and $168.21 per month for 60 months from April 16, 2013 for 60 months; b. The Claimants have not met the conditions for the One

(1) Year Money Back Guarantee, justifying the Defendant and the Crelogix Acceptance Corporation denying the one year guarantee; c. The Defendant’s salesperson did not make any misrepresentations to the Claimants; and d. The Defendant was not engaged in any “unconscionable act or practice” in its engagement with the Claimants. [ 13 ] I am satisfied that none of the Defendant’s assertions in the previous paragraph support its position: a. The Defendant’s assessment of the transaction does not support a finding that the consumer transaction is conscionable, b. The One

(1) Year Money Back Guarantee imposes the following standards on the Claimants without any evidence as to their validity and in my view, they are “so harsh [and] adverse to the consumer as to be inequitable” (s. 8(3)(e)), in that the elementary and young students must meet the following minimum requirements to qualify for the One

(1) Year Money Back Guarantee: “1. In order to qualify for the (1) year money back guarantee the student(

s) using the AcademyOne Learning Math software must be as a minimum requirement: - Use the (1) year AcaademyOne Learning Math software for a minimum of Thirty Minutes, Three Times a week for 44 (forty four) weeks of the 52 weeks (fifty-two) weeks (one year) following installation; - Send reports in on monthly basis via upload or post facility to AcademyOne Learning Tutor Support team; and - Complete lessons relevant to school work and all lessons recommended by the AcademyOne Learning Tutor Support team.

- Provide evidence that they have failed to gain measurable educational improvement within the first year by comparing past and current reports. ... 3. The one (1) year money back guarantee becomes immediately void if the student does not adhere to the minimum requirements stipulated for using the AcademyOne Learning Math software. The onus and responsibility for proving that the student met the minimum requirements for the one year (1) money back guarantee is with the Purchaser solely and exclusively.” c.

As mentioned above, the Defendant’s salesperson did not testify and the Claimants’ assertions of salesperson’s misrepresentations were upheld in their direct and cross-examinations. d. The Defendant’s assertion that it was not engaged in any “unconscionable act or practice” in its engagement with the Claimants is simply hollow.

THE CONTRACT AND CONSUMER PROMISSORY NOTE [ 14 ] Purchaser Order 2546 provides that the Defendant agrees to sell to the Claimants, and Claimants agree to purchase from the Defendant the “Math and English Wiz curriculum software designed for primary and secondary levels (the “Software Package”). The price is set at $6,462.40, paid by a $100 deposit plus the balance of $6,362.40 financed under the attached Credit Agreement between the Claimants and “Crelogix”, with 19.9% per year interest over the 5 year Credit Agreement. [ 15 ] The following documents relating to credit have been provided to the court: a.

Two apparently successive pages headed, “Consumer Promissory Note” and “Preauthorized Debit”, with both pages naming the Claimants as buyers, and with the second page signed by the Claimants as buyers, and naming the Defendant as seller and signed by its salesperson, on March 16, 2013; b.

A document signed by the Claimants to acknowledge they “understand that the Math and English Wiz Program we are purchasing from AcademyOne Learning Ltd. will be financed by Crelogix Acceptance Corporation.” [ 16 ] Both Purchase Order 2546 and the Consumer Promissory Note refer to the Business Practices and Consumer Protection Act , saying, “This is a contract to which the Business Practices and Consumer Protection Act applies.” [ 17 ] Counsel for the Defendant has referred me to a Provincial Court oral decision by The Honourable Judge Dhillon. Ravi Kapur v.

AcademyOne Learning and Susie Dixon , file No. 13-43854, dated August 8, 2014, is a case in which the Defendant here was also a defendant, and with the same counsel here. The Kapur case is based on Mr. Kapur’s agreement to purchase educational software in the same consumer transaction at issue here, including the same one-year money-back guarantee. [ 18 ] Judge Dhillon dismissed the Kapur claim and found that the contract was enforceable.

However, the decision does not mention the Act , and I do not read anything in it to suggest that either the unrepresented claimant or counsel for the defendant there mentioned the application of the Act . [ 19 ] The application of the Act is fundamental to my conclusion. As I mention above, the transaction is unconscionable and therefore is unenforceable against the Claimants. [ 20 ] The lack of reference to the Act in the Kapur decision also concerns me, because the Act raises the standard that requires that a consumer transaction must be conscionable to be binding and enforceable.

It appears to me that counsel for the Defendant did not make reference to the Act in his submission to Judge Dhillon. [ 21 ] Under

chapter 5.1-2 of Law Society Code of Professional Conduct provides that “when acting as an advocate, lawyer must not, ... (

i) deliberately refrain from informing a tribunal of any binding authority that the lawyer considers to be directly on point and that has not been mentioned by another party.” [ 22 ] The Defendant’s and its counsel’s privately transcribed use of the Kapur decision also concerns me. I understand that oral Provincial Court decisions must be reviewed and approved by the judge and registered by the Court.

I understand by what the Defendant’s counsel said in this hearing that his firm simply transcribed the Kapur oral decision on its own from the court’s tape and printed it as part of its submissions. [ 23 ] I read Judge Dhillon’s oral decision in the following paragraphs as transcribed by the Defendant, that without having being provided with any reference to the Act she concluded she was required to find that the only standard she could apply for the consumer transaction was whether the claimant was bound by the contractual words.

Judge Dhillon reluctantly concluded in the following words that she must do so because she was not referred to the Act requiring her to consider whether the terms and conditions are unconscionable: “[25] Unfortunately, the law cannot provide a remedy to an individual who chooses to accept the terms of a written contract without reading those terms. So Mr. Kapur made a bargain on the terms set out in the document and he is bound to those terms and conditions.

It is unfortunate that in matters such as this, where children’s education is concerned, love and emotion often take a front seat to good common legal sense. [26] I can say that in looking at these terms and conditions, I would find that they are onerous terms and conditions. I cannot imagine a parent who would force a child to do 30 minutes three times a week for 44 weeks if the child did not want to do so. That would be an onerous condition for a parent to force a child to do and that is only one such condition.

So, in this case, it was the hope and expectation that the program would be of benefit and the children would comply that led this contract being entered.

[27] I cannot look behind the four corners of the terms and conditions. They are binding on Mr. Kapur. He had to make sure the performance took place and that the terms of the guarantee were met before he could even apply to have the money refunded and, unhappily, it is a difficult guarantee to meet. [28] So, in the end, the positive aspect is that Mr. Kapur put his money and his confidence in his children in the hopes of supporting them and that is a good thing. He was prepared to spend his hard-earned money because he believed it would benefit his children.

The unfortunate thing is that, in doing so, he was coming up squarely within the four corners of the law and, in particular, contract law. In that regard, he has failed to prove that there has been any breach of the guarantee terms and, therefore, the case against the defendant is dismissed.” [ 24 ] It is clear from the decision that Judge Dhillon was not aware of the need for the Defendant to meet the standards in the Act that it did not “commit an unconscionable act or practice”.

It is clear to me that in her decision Judge Dhillon would have found that the Defendant offended the terms required by the Act , had she been made aware of the Act by the Defendant. [ 25 ] To reiterate I find that in the consumer transaction described above, the Defendant has “commit[ted] an unconscionable act or practice” which is prohibited by S.9(1) of the Act .

The consumer transaction is therefore not binding on the Claimants. [ 26 ] As a result, I order that the Defendant pay to the Claimants the total amount the Claimants have paid in the consumer transaction, that the Defendant also pay to the Claimants their court fees of $180 and court ordered interest from April 16, 2013 to payment, that the Claimants’ obligations to make any future payments related to this consumer transaction be cancelled, and that neither the consumer transaction nor the financing arrangement is binding on the Claimants. (the Act , s. 10(1)) [ 27 ] I find that the cost of and interest charges related to this consumer transaction are unconscionable; it is unconscionable for the Defendant to limit cancellation to the terms of the guarantee; and unconscionable for the Defendant and the finance company to impose and enforce an obligation to pay for an unused educational service and at the exorbitant rate of interest. ___________________ Brian J.

Wallace, Q.C. Adjudicator