2010 QCCA 2376, 2010 QCCA 2376

Unofficial English Translation Martin c. Société Telus Communications 2010 QCCA 2376 COURT OF APPEAL CANADA PROVINCE OF QUEBEC MONTREAL REGISTRY No.: 500-09-019845-098 (500-06-000443-081) DATE: December 21, 2010 CORAM: THE HONOURABLE JULIE DUTIL J.A. LORNE GIROUX J.A. JACQUES A. LÉGER J.A. NATALIE MARTIN APPELLANT – Petitioner c.

TELUS COMMUNICATIONS COMPANY RESPONDENT – Respondent JUDGMENT [ 1 ] The appellant appeals from a judgment rendered on June 15, 2009, by the Superior Court, district of Montreal (the Honourable Danièle Mayrand), which denied her motion for authorization to institute a class action. [ 2 ] For the reasons of Dutil J.A., with which Giroux and Léger JJ.A. concur, THE COURT: [ 3 ] ALLOWS the appeal with costs; [ 4 ] AUTHORIZES the bringing of the following class action, the whole with costs to follow the outcome of the appeal: A civil liability action for punitive or exemplary damages based on the Civil Code of Québec , the Consumer Protection Act and Quebec’s Charter of human rights and freedoms. [ 5 ] ASCRIBES to Natalie Martin the status of representative for the purposes of bringing said class action on behalf of the members of the group described below: All wireless telephone customers of the Telus Communications Company who had a fixed-term contract in force at the time they received the notice concerning the new rates applicable to incoming text messages and which will still be in force on August 24, 2008, and who were not subscribers, at the date of said notice, to a package that will include, beginning August 24, 2008, unlimited free incoming text messages.

However, any person who is not a consumer within the meaning of the Act is not a member of the group. [ 6 ] IDENTIFIES as the principal questions of fact and law that will be treated collectively:

a) Is the contract binding the members of the group to the respondent a consumer contract?

b) Are the sections entitled “What happens if I want to terminate my service?” and “What happens if I want to cancel my subscription?” which, read together with paragraph 17 of the document entitled “TELUS standard mobility Service Terms” , impose cancellation fees, even where the cancellation results from the unilateral change by the respondent of fees for services already contracted by the members of group, illegal and, therefore, null?

c) Is paragraph 17 of Exhibit R-3, which provides that the respondent may at its discretion amend the provisions of the contract binding it to the members of the group, “including any rates and charges”, on notice of at least 30 days, illegal and, therefore, null?

d) Did the respondent illegally change the rate for a service provided to the members of the group?

e) Are the members of the group entitled to a reimbursement of all charges incurred by the members of the group resulting from the illegal fee charged by the respondent?

f) Did the respondent unjustly enrich itself at the expense of the members of the group?

g) Are the members of the group entitled to a reimbursement of the amounts of the respondent’s unjust enrichment at the expense of the members of the group in each of the aforementioned cases?

h) Are the members of the group entitled to damages of $10 for inconvenience?

i) Are the members of the group entitled to punitive damages of $50? [ 7 ] IDENTIFIES as follows the conclusions sought with relation to such questions: ▪ ALLOW the class action of the representative and of the members of the group against the defendant; ▪ DECLARE that the contract binding the members of the group to the defendant is a consumer contract; ▪ DECLARE null any clause or part of a clause of the contract binding the members of the group to the defendant which imposes cancellation fees where the cancellation results from the unilateral change by the defendant of rates for services already contracted by the members of the group; ▪ DECLARE null any clause or part of a clause of the contract binding the members of the group to the defendant which provides that the respondent may at its discretion amend the provisions of the contract binding it to the members of the group, including any rates and charges, on at least 30 days’ notice; ▪ DECLARE that the rate change imposed by the defendant on the members of the group is illegal; ▪ CONDEMN the defendant to reimburse each member of the group for the amount illegally charged by it as well as the amount of its unjust enrichment at the expense of each member of the group and ORDER the collective recovery of said sums; ▪ CONDEMN the defendant to pay to each member of the group a sum of $10 as damages to compensate for the inconvenience suffered by all the members of the group and ORDER the collective recovery of said sums; ▪ CONDEMN the defendant to pay each member of the group a sum of $50 as punitive damages and ORDER the collective recovery of said sums; ▪ CONDEMN the defendant to pay on all the aforementioned sums interest at the legal rate as well as the additional indemnity provided in the Civil Code of Québec from the date of service of this motion for authorization to institute a class action; ▪ ORDER the defendant to deposit in the office of this Court all the sums subject to a collective recovery order, as well as the interest and the additional indemnity; ▪ ORDER that the claim of each member of the group be subject to individual liquidation; ▪ TAKE any other measures that the Court deems necessary to safeguard the rights of the parties; ▪ THE WHOLE with costs, including expert and notice fees. [ 8 ] DECLARES that, unless they opt out, the members of the group will be bound by any judgment to be rendered on the class action in the manner provided by law; [ 9 ] FIXES the opt-out period at thirty days following the publication of the notice to the members, at the expiry of which the members of the group who have not opted out will be bound by any judgment to be rendered; [ 10 ] ORDERS the publication of a notice to the members in such terms and by such means as will be determined by the Court after the submissions of counsel for the parties; [ 11 ] REFERS the file to the Chief Justice of the Superior Court for determination of the district in which the class action is to be brought and designation of the judge to hear it; [ 12 ] ORDERS the clerk of the Superior Court, in the event that the class action is to be brought in another district, to transmit the file to the clerk of such other district after the Chief Justice has made his decision.

JULIE DUTIL J.A. LORNE GIROUX J.A. JACQUES A. LÉGER J.A.

Mtre Peter Shams and Mtre Cory Verbauwhede Grenier, Verbauwhede For the appellant Mtre Michel Jolin Mtre François LeBel Langlois Kronström Desjardins For the respondent Hearing date: November 16, 2010 REASONS OF DUTIL J.A. [ 13 ] The appellant appeals from a judgment rendered on June 15, 2009, by the Superior Court which denied her motion for authorization to institute a class action. [ 14 ] On March 15, 2007, the appellant signed a cellular telephone service contract for a term of three years with the respondent Telus Communication Company (Telus).

On June 17, 2008, she received her monthly bill, which contained the following note: [TRANSLATION] New Rate Effective August 24, 2008, the rate for all incoming text messages will increase to $0.15 per message. There will be no charge for incoming messages for clients presently subscribed to a package that includes messaging or to a Parlez EUPHORIK plan.

Customers subscribed to Ma Clik or to a Share plan with unlimited text messages will pay only for incoming messages from numbers other than those included in their plan. [ 15 ] It is not contested that before said date, incoming text messages were free for all Telus customers, regardless of their plan or whether or not they had signed a contract for a fixed term.

The legal qualification of this free service, however, is contested. [ 16 ] The appellant filed a motion to institute a class action against the respondent in order to represent a group described as follows: All wireless telephone customers of the Telus Communications Company who had a fixed-term contract in force at the time they received the notice concerning the new rates applicable to incoming text messages and which will still be in force on August 24, 2008, and who were not subscribers,... at the date of said notice, to a package that will include, beginning August 24, 2008, unlimited free incoming text messages.

However, any person who is not a consumer within the meaning of the Act is not a member of the group. … [ 17 ] The appellant wants to bring an action to obtain reimbursement of the fees charged for incoming text messages as well as damages for inconvenience suffered and punitive damages.

She also wants the clause stipulating cancellation fees for persons wishing to terminate their contract because of these new charges, as well as the clauses allowing Telus to amend at its discretion any provision of the contract on 30 days’ notice, to be declared null. the judgment under appeal [ 18 ] The trial judge considered unfounded the appellant's position that Telus made unilateral amendments to the contract. She believed that the appellant's action would fail. [ 19 ] The judge first acknowledged that criteria (

a) and (

c) of

article 1003 C.C.P. were satisfied, which Telus admitted. [ 20 ] As for paragraph (

b) of

article 1003 C.C.P., which deals with colour of right, the judge wrote that [ translation ] “The authorization stage of a class action is one of demonstration, but it is not a pure formality”. She therefore took the alleged facts as proven and also considered the evidence that she admitted in the case. Based on this information, the appellant must demonstrate the cogency of her legal syllogism. [ 21 ] With respect to cellular technology, the judge admitted that this field is complex.

She believed that the evidence filed by the appellant was minimal and that it was only with the evidence presented by Telus that one could understand the services and plans offered to subscribers as well as the scope of the contractual obligation with the appellant. [ 22 ] Whether it is from the angle of the theory of abuse of right or of unjust enrichment, the judge believed the action was clearly

unfounded. She deemed that Telus had not amended the contract and the appellant's plan by charging a fee of $0.15 for each incoming text message, because that was not included. The appellant used the pay-per-use service several times during her contract, but the judge held that this was not covered by one of the terms contracted with Telus under her plan. [ 23 ] The judge mentioned, moreover, that the fact that the appellant's cell phone could send and receive text messages did not constitute a term of her plan.

Nor could she argue that she was forced to pay for incoming messages, because Telus allowed her to deactivate reception of Internet or telephone text messages by contacting customer service. [ 24 ] The judge therefore concluded that the appellant had not demonstrated, prima facie , that text messaging was part of her contract and that Telus had amended the contract. [ 25 ] Subsidiarily, the judge held that the appellant was not able to adequately represent the members of the group according to the criteria set forth in paragraph (

d) of

article 1003 C.C.P. To determine whether these criteria were met, she considered the following three factors: (1) the interest in instituting the action, (2) competence and (3) absence of conflict with the members of the group. [1] [ 26 ] The judge explained that the appellant failed in this regard, because it is not enough to assert one's good faith and one’s intention [ translation ] “to keep informed of ongoing developments” to be able to act as a representative. The judge deemed that the appellant had made no personal effort to prove her capacity to act.

She did not file her contract until the day before the hearing and after Telus had done so. Moreover, the evidence she filed was minimal. The judge believed that without the evidence submitted by Telus, she would not have had the elementary information to understand the scope of the parties' contractual obligations. She therefore denied the motion for authorization. the questions at issue [ 27 ] The appellant raises five questions, which can be summarized as follows: 1.

Did the trial judge err in concluding that the alleged facts, together with the respondent's evidence, do not seem to justify the conclusions sought according to criterion (

b) of

article 1003 C.C.P. ? 2. Did the trial judge err in concluding that the appellant does not qualify as a representative of the group according to criterion (

d) of

article 1003 C.C.P. ? analysis [ 28 ] The appellant argues primarily that the trial judge erred in concluding that text messaging was not part of her contract with Telus. [ 29 ] Telus contends that text messaging was a “pay-per-use” function and was never part of the appellant's contract. Charging a fee of $0.15 per incoming message did not therefore constitute a change to her contract, because text messages were never included in her plan. [ 30 ] It is well established that a judge seized of a motion for authorization to institute a class action has discretionary power in assessing the four conditions set forth in

article 1003 C.C.P. [2] If the judge concludes that these conditions are satisfied, however, the action must be authorized. [3] [ 31 ] As my colleague Pelletier J. stated in Bouchard v. Agropur Coopérative , [4] the trial judge’s assessment warrants deference. However, the Court may intervene if it contains an error of law. [ 32 ] At the authorization stage, the appellant's burden is one of demonstration. According to paragraph (

b) of

article 1003 C.C.P. , it will be satisfied “if the facts alleged seem to justify the conclusions sought”. In the case at bar, the syllogism that the appellant wishes to demonstrate is the following: 1. She signed a three-year contract with Telus in March 2007; 2. When she signed the contract, she was entitled to free incoming text messages; 3. On June 17, 2008, Telus notified its customers that, beginning August 24, 2008, the rate for incoming text messages would be $0.15 per message; 4.

Paragraph 17 of the document entitled “TELUS standard mobility Service Terms" provides that Telus may amend the contract, whereas the members of the group have only the following options if this occurs, as in the case at bar: a. cancel their contract by paying the higher of: (1) $20 multiplied by the number of months remaining on the contract or (2) $100; b. pay $0.15 per text message; c. subscribe to a euphorik package for the remaining term of the contract. 5. The clauses or parts of clauses providing that Telus may unilaterally change the rates are abusive; 6.

The clauses or parts of clauses that impose cancellation fees when cancellation results from a unilateral amendment of the contract by Telus are abusive. [ 33 ] The trial judge was of the opinion that the appellant did not demonstrate that text messaging was part of her contract. Consequently, there was no amendment to the contract. She wrote:

[ translation ] [23] The subscriber chooses “a plan” that includes a number of minutes, during various time periods, for a specific fee. The plan is for a fixed term (one year, two years or three years). … [34] The petitioner’s plan does not include text messaging, except via a bonus that she received twice during the term of her contract.

She did not subscribe to a plan or package that included text messages. [35] During the term of her contract, the petitioner used the pay-per-use service on several occasions, but the Court concludes that no terms to this effect were contracted with Telus as part of her plan, which does not include text messaging. [36] The fact that her phone enables her to use this function does not make it a term of her plan, nor does it entitle her to claim that her contract was changed.

She must pay per use, according to the data and conditions applicable at the time of such use. [ 34 ] With respect, the judge erred in limiting the contract to what was included in the plan. The plan is only one component of the contract. During its term, a subscriber can change the plan at no cost twice per calendar year and be charged an additional $10 for each additional change. This is a term of the contract. [ 35 ]

Article 1412 C.C.Q. defines the object of a contract as “ the juridical operation envisaged by the parties at the time of its formation, as it emerges from all the rights and obligations created by the contract”.

Section 12 of the Consumer Protection Act contains the following provision [5] : 12. No costs may be claimed from a consumer unless the amount thereof is precisely indicated in the contract. [ 36 ] For Telus to claim fees from its customers, including the appellant, the fees must be part of the contract. When the appellant signed her contract in March 2007, she was entitled under the contract to free incoming messages.

To be able to charge a fee of $0.15 per incoming message, Telus had to unilaterally amend the contract. [ 37 ] Moreover, it appears from the appellant's contract that the terms of the offer are in addition to the wireless service terms that may be consulted on the Telus website. Clause 17 of said terms provides that Telus may unilaterally change the service terms on 30 days’ notice: 17.

Changes These service terms (including any rates and charges) may be changed unilaterally by TELUS from time to time on at least thirty (30) days' notice to you, and such changes shall become effective once you use the service after such thirty (30) day period (which use shall be deemed conclusively to indicate acceptance of such changes). [ 38 ] The judge confused the plan with the contract and thus erred in law.

As Telus unilaterally amended the contract, I am of the opinion that the appellant demonstrated prima facie her legal syllogism. [ 39 ] The judge also determined that the appellant is not able to provide adequate representation for the purposes of the action. She pointed out the appellant did not file her contract until the day before the hearing and deemed the evidence she offered to be minimal.

She wrote: [ translation ] [40] Three factors are taken into account to determine if the petitioner is able to provide adequate representation for the purposes of the action; (1) the interest in instituting the action; (2) competence; (3) absence of conflict with the members of the group. [41] The petitioner has the burden of demonstrating that she satisfies these criteria. [42] With respect, she has failed.

It is not enough to assert one's good faith and one’s intention “to keep informed of ongoing developments” to qualify. [43] The petitioner made no effort and took no personal steps to prove her capacity to act. She did not file her contract until the day before the hearing and after Telus did so. The evidence she submitted is minimal and incomplete. Were it not for the evidence admitted in favour of the respondent, the Court would not have the elementary information to understand the scope of the parties' contractual obligations. [44] Although the bar is not very high, the petitioner must nevertheless reach it.

It is not for the Court to infer or assume that the criterion is satisfied. [ references omitted ] [ 40 ] The present case is of a contractual nature. The composition of the group is relatively easy to establish.

The appellant maintains that 360 persons expressed interest by registering on the class action website. [ 41 ] Furthermore, although she did not provide a copy of her contract until the day before the hearing, the appellant filed several documents, including her statement of account, a standard contract, the pages of the Telus website that explain the standard contract terms, and the document describing her plan at the time of the notice in June 2008. It is true that the seasonal Telus leaflets in force in 2007 were filed by a witness for Telus, but he stated that he himself had difficulty finding them.

[ 42 ] In the circumstances, the appellant demonstrated that she has the requisite qualities to act as a representative. Moreover, she was present at the motion hearing and could have been questioned on that matter. [ 43 ] For these reasons, I would allow the appeal with costs. JULIE DUTIL J.A.