Jean-Marc Richard Appellant v. Time Inc. and Time Consumer Marketing Inc., 2012 SCC 8

SUPREME COURT OF CANADA Citation: Richard v. Time Inc., 2012 SCC 8, [2012] 1 S.C.R. 265 Date: 20120228 Docket: 33554 Between: Jean-Marc Richard Appellant and Time Inc. and Time Consumer Marketing Inc. Respondents Official English Translation Coram: McLachlin C.J. and LeBel, Deschamps, Fish, Abella, Charron and Cromwell JJ. Joint Reasons for Judgment: (paras. 1 to 217) LeBel and Cromwell JJ. (McLachlin C.J. and Deschamps, Fish, Abella and Charron JJ. concurring) Richard v. Time Inc., 2012 SCC 8, [2012] 1 S.C.R. 265 Jean-Marc Richard Appellant v. Time Inc. and Time Consumer Marketing Inc.

Respondents Indexed as: Richard v. Time Inc. 2012 SCC 8 File No.: 33554. 2011: January 18; 2012: February 28. Present: McLachlin C.J. and LeBel, Deschamps, Fish, Abella, Charron and Cromwell JJ. on appeal from the court of appeal for quebec Consumer protection — Prohibited business practices — False or misleading representations — Court of Appeal finding that merchant’s representations would not mislead consumer “with average level of intelligence, scepticism and curiosity” — Test for

determining whether general impression given by representation constitutes prohibited practice — Consumer Protection Act, R.S.Q., c. P-40.1, ss. 218 , 219 , 228 , 238 (c). Consumer protection — Prohibited business practices — Recourses — Conditions for exercising recourses — Conditions that apply where consumer seeks, under s. 272 of Consumer Protection Act , to have court sanction violations of Title II of that Act — Consumer Protection Act, R.S.Q., c. P-40.1, ss. 2 , 253 , 272.

Consumer protection — Prohibited business practices — Recourses — Consumer seeking compensatory and punitive damages under s. 272 of Consumer Protection Act — Conditions for awarding damages and criteria for determining their quantum — Consumer Protection Act, R.S.Q., c. P-40.1, s. 272 — Civil Code of Québec, S.Q. 1991, c. 64, art. 1621 . In his mail, R received an “Official Sweepstakes Notification” (the “Document”) in the form of a letter supposedly signed by the manager responsible for the sweepstakes.

Along the edge of the letter were boxes printed in colour, some of which, because they referred to Time magazine, could lead the recipient to infer that it was from T and TCM. In the Document, which was written in English only, several exclamatory sentences in bold uppercase letters, whose purpose was to catch the reader’s attention by suggesting that he or she had won a cash prize of US$833,337, were combined with conditional clauses in smaller print, some of which began with the words “If you have and return the Grand Prize winning entry in time”.

In addition, the back side of the letter informed R that he would qualify for a $100,000 bonus prize if he validated his entry within five days. The mailing also contained a reply coupon and a return envelope on which the official rules of the sweepstakes appeared in small print. The reply coupon also offered R the possibility of subscribing to Time magazine. As well, the rules stated that a winning number had been pre-selected by computer and that the holder of that number could receive the grand prize only if the reply coupon was returned by the deadline.

If the holder of the pre-selected winning number did not return the reply coupon, the rules explained, the grand prize winner would be selected by random drawing among all eligible entries, that is, everyone who had returned the reply coupon, and each participant’s odds of winning would then be 1:120 million. Convinced that he was about to receive the promised amount, R immediately returned the reply coupon that was in the envelope. In doing so, he also subscribed to Time magazine. R began regularly receiving issues of the magazine a short time later, but the cheque he was expecting was a long time coming.

He contacted T and TCM, which informed him that he would not be receiving a cheque, because the Document had not contained the winning entry for the draw and was merely an invitation to participate in a sweepstakes. They also informed him that the manager who had signed the letter did not exist; the name was merely a “pen name”. R filed a motion to institute proceedings in which he asked the Quebec Superior Court to declare him to be the winner of the cash prize mentioned in the Document and to order T and TCM to pay compensatory and punitive damages corresponding to the value of the grand prize.

The Superior Court allowed the action in part. It held that the Document contravened Title II of the Consumer Protection Act (“ C.P.A. ”) on prohibited business practices and that the civil sanctions provided for in s. 272 C.P.A. were accordingly available. The judge set the value of the moral injuries suffered by R at $1,000 and fixed the quantum of punitive damages that were also awarded to him at $100,000. The Court of Appeal allowed the appeal of T and TCM and concluded that they had not violated the C.P.A.

First, T and TCM had not violated s. 228 C.P.A. by failing to indicate clearly in the Document that R might not be the grand prize winner. Moreover, using the name of a fictitious person as the signer of the Document did not contravene s. 238 (

c) C.P.A. , since it did not have the potential to mislead consumers about the merchant’s identity. Finally, there were no false or misleading representations in the Document, as it would not mislead a consumer “with an average level of intelligence, scepticism and curiosity”. The Court of Appeal set aside the award of compensatory and punitive damages. Held : The appeal should be allowed in part.

Per McLachlin C.J. and LeBel, Deschamps, Fish, Abella, Charron and Cromwell JJ.: The analytical approach chosen by the Court of Appeal for establishing the general impression conveyed by the advertisement of T and TCM was inconsistent with the test adopted by the legislature.

According to s. 218 C.P.A. , which guides the application of all the provisions of Title II concerning prohibited business practices, to determine whether a representation constitutes such a practice, it is necessary to consider the “general impression” given by the representation and, where appropriate, the “literal meaning” of the words used in it. In the case of false or misleading advertising, the general impression is the one a person has after an initial contact with the entire advertisement, and it relates to both the layout of the advertisement and the meaning of the words used.

It is analysed without considering the personal attributes of the consumer who has instituted proceedings against the merchant. To be consistent with the legislature’s objective of protecting vulnerable persons from the dangers of certain advertising techniques, the general impression test must be applied from the perspective of the average consumer, who is credulous and inexperienced and takes no more than ordinary care to observe that which is staring him or her in the face upon first entering into contact with an entire advertisement.

Considerable importance must be attached not only to the text, but also to the entire context, including the way the text is displayed to the consumer. Defining the average consumer as having “an average level of intelligence, scepticism and curiosity” is inconsistent with the letter and the spirit of s. 218 C.P.A.

A court asked to assess the veracity of a commercial representation must engage, under s. 218 C.P.A. , in a two-step analysis that involves — having regard, where appropriate, to the literal meaning of the words used by the merchant — (1) describing the general impression that the representation is likely to convey to a credulous and inexperienced consumer; and (2) determining whether that general impression is true to reality. If the answer at the second step is no, the merchant has engaged in a prohibited practice.

In this case, the average consumer, after first reading the Document, would have been under the general impression that R held the winning entry and had only to return the reply coupon to initiate the claim process. The Document’s strange collection of affirmations and restrictions was not clear or intelligible enough to dispel the general impression conveyed by the most prominent sentences. Even if it did not necessarily contain any statements that were actually false, the fact remains that it was riddled with misleading representations within the meaning of s. 219 C.P.A.

Furthermore, the contest rules were not all apparent to someone reading the Document for the first time. These are important facts that T and TCM were required to mention. As a result, T and TCM also violated s. 228 C.P.A. However, the use by T and TCM of a “pen name” in their advertising material did not amount to a violation of s. 238(

c) of the C.P.A. , as the Document contained no false representations concerning their status or identity. It can be understood from a single reading that the Document was from them and that they did not claim to have a particular status or identity that they did not actually have.

Subject to the other recourses provided for in the C.P.A. , a consumer can institute proceedings under s. 272 C.P.A. to have the court sanction a failure by a merchant or a manufacturer to fulfil an obligation imposed on the merchant or manufacturer by the C.P.A. , by the regulations made under the C.P.A. or by a voluntary undertaking. Where a merchant or a manufacturer fails to fulfil an obligation to which s. 272 C.P.A. applies, the consumer can claim a contractual remedy, compensatory damages and punitive damages, or just one of those remedies.

It will then be up to the trial judge to award the remedies he or she considers appropriate in the circumstances. However, the sanction available under s. 272 for failing to fulfil an obligation must be imposed in accordance with the principles governing the application of the C.P.A. and, where applicable, the rules of the general law. In particular, legal interest under that provision depends on the existence of a contract to which the Act applies, since s. 2 C.P.A. establishes the basic principle that a consumer contract must exist for the Act to apply, except in the specific case of the penal provisions.

The recourse is therefore available only to natural persons who have entered into a contract governed by the Act with a merchant or a manufacturer. The presumption of fraud provided for in s. 253 C.P.A. does not delimit the scope of s. 272 C.P.A. or govern the principles that underlie the application of that section. Rather, it provides consumers with additional protection in situations in which they do not wish or are not able to exercise a recourse under s. 272 C.P.A.

Similarly, s. 217 C.P.A. , which provides that the fact that a prohibited practice has been used is not subordinate to whether or not a contract has been made, is not intended to govern the conditions under which the recourses provided for in s. 272 C.P.A. are available and can be exercised. It relates only to the existence of a prohibited practice and authorizes the Director of Criminal and Penal Prosecutions to enforce the Act on a preventive basis, in keeping with the legislature’s intention.

For the contractual remedies provided for in s. 272 C.P.A. to be available, a consumer does not have to prove fraud and its consequences on the basis of the ordinary rules of the civil law, since, given the influence that prohibited practices can have on a consumer’s decision to enter into a contractual relationship with a merchant, a prohibited practice in itself constitutes fraud within the meaning of art. 1401 of the Civil Code of Quebec (“ C.C.Q. ”). As well, a merchant or manufacturer who is sued cannot raise a defence based on “fraud that has been uncovered and is not prejudicial”.

The recourse provided for in s. 272 C.P.A. is based on the premise that any failure to fulfil an obligation imposed by the Act gives rise to an absolute presumption of prejudice to the consumer. Proof that one of the statutory contractual obligations that are set out primarily in Title I of the Act has been violated entitles a consumer, without having to meet any additional requirements, to obtain one of the contractual remedies provided for in s. 272 .

A consumer who wishes to benefit from this presumption in order to have a court sanction the use by a merchant or a manufacturer of practices prohibited by Title II of the Act must prove the following: (1) that the merchant or manufacturer failed to fulfil one of the obligations imposed by Title II of the Act; (2) that the consumer saw the representation that constituted a prohibited practice; (3) that the consumer’s seeing that representation resulted in the formation, amendment or performance of a consumer contract; and (4) that a sufficient nexus existed between the content of the representation and the goods or services covered by the contract.

This last requirement means that the prohibited practice must be one that was capable of influencing a consumer’s behaviour with respect to the formation, amendment or performance of the contract. Where these four requirements are met, the contract so formed, amended or performed constitutes, in itself, a prejudice suffered by the consumer, and the consumer is entitled to demand one of the contractual remedies provided for in s. 272 C.P.A. The recourse in damages provided for in s. 272 C.P.A. is not dependent on the specific contractual remedies set out in s. 272(

a) to ( f ). It must nevertheless be exercised in accordance with the rule concerning the legal interest required to institute proceedings under s. 272 and is subject to the general rules of Quebec civil law. In addition, a claim for extracontractual compensatory damages is available, since fraud committed during the pre-contractual phase is a civil fault that can give rise to extracontractual liability.

Where the recourse in damages provided for in s. 272 C.P.A. is available to a consumer, his or her burden of proof is therefore eased, regardless of whether the recourse is contractual or extracontractual in nature, because of the absolute presumption of prejudice that results from any unlawful act committed by the merchant or manufacturer. This presumption means that the consumer does not have to prove that the merchant intended to mislead. A consumer to whom the irrebuttable presumption of prejudice applies has also succeeded in proving the fault of the merchant or manufacturer for the purposes of s. 272 C.P.A.

In this case, R has discharged his burden of proving a sufficient nexus between the prohibited practices engaged in by T and TCM and his subscription contract with them. R subscribed to Time magazine after reading the documentation T and TCM had sent him, and the trial judge found that he would not have subscribed to the magazine had he not read the misleading documentation. As a result, the Document is deemed to have had a fraudulent effect on R’s decision to subscribe to Time magazine. The conduct of T and TCM that is in issue constitutes a civil fault that triggers their extracontractual liability.

There is no reason to interfere with the trial judge’s finding that the fault of T and TCM caused moral injuries to R or with her award of $1,000 for those injuries. T and TCM have not shown that she erred in assessing the evidence or in applying the legal principles with regard either to their liability or to the quantum of damages. Furthermore, consumers can be awarded punitive damages under s. 272 C.P.A. even if they are not awarded contractual remedies or compensatory damages at the same time.

Because s. 272 C.P.A. establishes no criteria or rules for awarding punitive damages, such damages must be awarded in accordance with art. 1621 C.C.Q. and must have a preventive objective, that is, to discourage the repetition of undesirable conduct. The award must also be consistent with the objectives of the C.P.A. , namely to restore the balance in the contractual relationship between merchants and consumers and to eliminate unfair and misleading practices. Violations by merchants or manufacturers that are intentional, malicious or vexatious, and conduct on their

part in which they display ignorance, carelessness or serious negligence with respect to their obligations and consumers’ rights under the C.P.A. may result in awards of punitive damages. However, before awarding such damages, the court must consider the whole of the merchant’s conduct at the time of and after the violations. An award of punitive damages was justified in this case, but the amount of $100,000 awarded by the trial judge should be varied.

Although the trial judge did not err in finding that T and TCM had sent many mailings in Quebec to a large number of consumers and that these promotional sweepstakes had enabled them to sell many new subscriptions, she did err in considering the Charter of the French language and the patrimonial situation of T and TCM when assessing the appropriate quantum of punitive damages.

T and TCM had intentionally violated the C.P.A. in a calculated manner in this case, and that violation was capable of affecting a large number of consumers, whereas nothing in the evidence indicates that, after R complained, T and TCM took corrective action to make their

advertising clear or consistent with the letter and spirit of the C.P.A. This is an aggravating factor. On the other hand, the impact on Rof the fault committed by T and TCM remains quite limited, though, it is true, not negligible, and R’s attitude contributed to theproportions this case has ultimately assumed. Nevertheless, the fact that the amount of the award of compensatory damages is smallfavours awarding a significant amount of punitive damages.

An amount of $15,000 suffices in the circumstances to fulfil the preventivepurpose of punitive damages, underlines the gravity of the violations of the Act and sanctions the conduct of T and TCM in a mannerthat is serious enough to induce them to cease the prohibited practices in which they have been engaging, if they have not already doneso. Costs in the Superior Court and the Court of Appeal will be taxed in accordance with the tariffs applicable in those courts. However, R will have his costs in the Supreme Court of Canada on a solicitor and client basis because of the importance of the issues oflaw he raised.

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APPEAL from a judgment of the Quebec Court of Appeal (Chamberland, Morin and Rochon JJ.A.), 2009 QCCA 2378 , [2010] R.J.Q. 3, SOQUIJ AZ-50590237, [2009] J.Q. n o 15288 (QL), 2009 CarswellQue 12570, reversing a decision of Cohen J., 2007 QCCS 3390 , [2007] R.J.Q. 2008, SOQUIJ AZ-50442262, [2007] Q.J. No. 7531 (QL), 2007 CarswellQue 6654. Appeal allowed in part. Hubert Sibre , Annie Claude Beauchemin and Jean-Yves Fortin , for the appellant. Pascale Cloutier and Fadi Amine , for the respondents. English version of the judgment of the Court delivered by LeBel and Cromwell JJ. — I.

Introduction [ 1 ] This appeal arises out of an advertising campaign that undoubtedly did not turn out as intended. The central issues in the case are whether the respondents, by mailing a document entitled “Official Sweepstakes Notification” (the “Document”) to the appellant, engaged in a practice prohibited by the Consumer Protection Act , R.S.Q., c. P-40.1 (“ C.P.A. ”), and, if so, whether the appellant is entitled to punitive and compensatory damages under s. 272 C.P.A.

To decide these issues, the Court must, inter alia , define the characteristics that are relevant to the determination of whether a commercial representation is false or misleading, as well as the conditions for exercising the recourses in damages provided for in s. 272 C.P.A. [ 2 ] In concrete terms, the appellant is appealing a judgment in which the Quebec Court of Appeal denied his claim for damages on the basis that the content of the Document did not violate any of the provisions of the C.P.A. ( 2009 QCCA 2378 , [2010] R.J.Q. 3).

The Court of Appeal’s main reason for denying the claim was that the Document would not mislead a consumer [ translation ] “with an average level of intelligence, scepticism and curiosity” (para. 50). In this Court, the appellant argues that the criteria used by the Court of Appeal to define the average consumer for the purposes of the C.P.A. undermine certain of the foundations of Quebec consumer law. He is therefore asking this Court to reject that definition, find that the Document is misleading and award him punitive damages equivalent to nearly $1 million.

[ 3 ] For the reasons that follow, we agree with the appellant that the Document contains representations that contravene the C.P.A. ’s provisions concerning prohibited business practices. We also agree with him that the Court of Appeal’s definition of the “average consumer” is inconsistent with the objectives of the C.P.A. and must therefore be rejected. Finally, we would allow his claim for compensatory and punitive damages, but only in part. II. Origin of the Case [ 4 ] On August 26, 1999, the appellant, Jean-Marc Richard, found the Document in his mail.

It was in English only and was in the form of a “letter” addressed to him and signed by Elizabeth Matthews, Director of Sweepstakes. Along the edge of the letter were various boxes printed in colour, some of which, because they referred to Time magazine, could lead the recipient to infer that it was from the respondents.

The Document began with a sentence that immediately caught the reader’s attention: OUR SWEEPSTAKES RESULTS ARE NOW FINAL: MR JEAN MARC RICHARD HAS WON A CASH PRIZE OF $833,337.00! [ 5 ] However, a closer look at the Document reveals that this passage was part of a two-part sentence that read as follows: If you have and return the Grand Prize winning entry in time and correctly answer a skill-testing question, we will officially announce that OUR SWEEPSTAKES RESULTS ARE NOW FINAL: MR JEAN MARC RICHARD HAS WON A CASH PRIZE OF $833,337.00! [ 6 ] This opening sentence clearly illustrates the technique used in the writing and layout of the Document: several exclamatory sentences in bold uppercase letters, whose purpose was to catch the reader’s attention by suggesting that he or she had won a large cash prize, were combined with conditional clauses in smaller print, some of which began with the words “If you have and return the Grand Prize winning entry in time”.

For example, the Document identified the appellant as one of the latest sweepstakes winners and stated in large print that payment of his cash prize had been authorized.

However, the heading “ LATEST CASH PRIZE WINNERS ”, under which the appellant’s name appeared, was preceded by the following sentence in small letters: “If you have and return the Grand Prize winning entry in time, our new list of major cash prize winners will read as follows”. [ 7 ] This same writing technique was used elsewhere in the letter, as several prominent sentences intended to boost the recipient’s enthusiasm were combined with inconspicuous conditional clauses.

It will be helpful to reproduce some passages from the Document to better illustrate the specific features of this technique: If you have and return the Grand Prize winning entry in time and correctly answer a skill-testing question, we’ll confirm that WE ARE NOW AUTHORIZED TO PAY $833,337.00 IN CASH TO MR JEAN MARC RICHARD! . . . . . . And now that we’ve been authorized to pay the prize money, the very next time you hear from us if you win, it will be to inform you that A BANK CHEQUE FOR $833,337.00 IS ON ITS WAY TO —— ST! . . . . . .

The truth is, if you hold the Grand Prize winning number, YOU WILL FORFEIT THE ENTIRE $833,337.00 IF YOU FAIL TO RESPOND TO THIS NOTICE! [ 8 ] Along with these many references to the “Grand Prize winning entry”, the Document assigned the appellant a “Prize Claim Number” that was to be used for identification purposes when the entries were validated. In addition, the back side of the letter informed the appellant that he would qualify for a $100,000 bonus prize if he validated his entry within five days.

It then referred to various benefits the appellant could have if he decided to subscribe to Time magazine at the same time as he validated his entry. All this information was set out as follows in the Document: YOU’LL QUALIFY FOR A $100,000.00 BONUS IF YOU RESPOND WITHIN 5 DAYS! . . . YOU’LL RECEIVE A FREE GIFT: THE ULTRONIC TM PANORAMIC CAMERA & PHOTO ALBUM SET! . . . YOU’LL ALSO RECEIVE TIME AT UP TO 74% SAVINGS!

. . . . . . And if you hold the Grand Prize winning entry, A BANK CHEQUE FOR $833,337.00 IN CASH WILL BE SENT TO YOU VIA CERTIFIED MAIL — IF YOU RESPOND NOW! [ 9 ] To show more clearly what the Document looked like, we have reproduced it in its entirety in an appendix to these reasons.

For now, suffice it to say that the Document’s visual content and writing style are central to the issue of whether the mailing of the Document constitutes a prohibited practice within the meaning of the C.P.A. [ 10 ] In addition to the Document, the mailing received by the appellant contained a reply coupon entitled “Official Entry Certificate” and a return envelope on which the official rules of the sweepstakes appeared in small print. The reply coupon also offered the appellant the possibility of subscribing to Time magazine for a period ranging from seven months to two years.

As well, the official rules stated that a winning number had been pre-selected by computer and that the holder of that number could receive the grand prize only if the reply coupon was returned by the deadline.

If the holder of the pre-selected winning number did not return the reply coupon, the rules explained, the grand prize winner would be selected by random drawing among all eligible entries, that is, everyone who had returned the reply coupon, and each participant’s odds of winning would then be 1:120 million. [ 11 ] The appellant testified that he had carefully read the Document twice the day he received it and had concluded that he had just won US$833,337.

The next day, he took the Document to work to ask a vice-president of the company he worked for, whose first language was English, whether he had understood the Document correctly. The vice-president agreed that the appellant had just won the grand prize referred to in the Document. Convinced that he was about to receive the promised amount, the appellant immediately returned the reply coupon that was in the envelope.

In doing so, he also subscribed to Time magazine for two years, and this entitled him to receive a free camera and photo album, as was indicated on the back of the Document. [ 12 ] The appellant received the camera and photo album a short time later. He also began regularly receiving issues of the magazine. However, the cheque he was expecting was a long time coming. Believing that he had been patient enough, he decided to call Elizabeth Matthews at Time Inc. to inquire about the processing of his cheque.

After leaving a few messages to which he received no reply, the appellant was finally able to speak with a representative of the marketing department of the respondent Time Inc. in New York. He then learned that he would not be receiving a cheque, because the Document mailed to him had not contained the winning entry for the draw. During the telephone conversation, Time Inc.’s representative told the appellant that the Document was merely an invitation to participate in a sweepstakes.

The appellant was also informed that Elizabeth Matthews did not exist; the name was merely a “pen name” used by the respondents in their advertising material. [ 13 ] The appellant replied that the Document clearly announced that he was the prize winner. His protests got him nowhere. The respondents flatly refused to pay him the amount he was claiming. [ 14 ] On September 29, 2000, the appellant filed a motion to institute proceedings. He first asked the Quebec Superior Court to declare him to be the winner of the cash prize mentioned in the Document.

He argued that the Document was an offer to contract within the meaning of art. 1388 of the Civil Code of Québec , S.Q. 1991, c. 64 (“ C.C.Q. ”), and that he had accepted the offer by returning the reply coupon. He accordingly asked the court to order the respondents to provide him with the skill-testing question and pay him the grand prize amount. In the alternative, he asked the court to order the respondents to pay compensatory and punitive damages corresponding to the value of the grand prize (A.R., vol. I, at p. 53). III. Judicial History A.

Quebec Superior Court ( 2007 QCCS 3390 , [2007] R.J.Q. 2008 , Cohen J.) [ 15 ] Cohen J. began by considering the contractual portion of the claim. She found that the parties had not entered into a contract and accordingly refused to order payment of the prize claimed by the appellant. [ 16 ] Cohen J. then considered the appellant’s claim for damages, which was based on alleged violations of the C.P.A. She held that the convoluted style of the offer contravened Title II of the C.P.A. on prohibited business practices.

She wrote the following: The very same “conditional” wording which enabled Time to avoid the argument that a contract was formed or that it undertook unconditionally to pay $833,337 to Mr. Richard, illustrates the contention that this document was specifically designed to mislead the recipient, that it contains misleading and even false representations, contrary to the clear wording of

article 219 of the Consumer Protection Act . . . . [Emphasis in original; para. 34.] [ 17 ] Cohen J. reached this conclusion on the basis of the general impression conveyed by the Document. Referring to s. 218 C.P.A. , she stated that the Document gave the general impression that the appellant had won the grand prize. In her view, the general design of the Document thus amounted to a false or misleading representation within the meaning of s. 219 C.P.A. [ 18 ] Cohen J. added that the Document contained two false representations.

First, its signer, Elizabeth Matthews, did not exist, so she could not have “certified” the content of the Document, contrary to what was stated. That fiction was in clear contravention of ss. 219 and 238 C.P.A. , since it gave an imaginary person a particular status or identity (para. 38). Next, the fact that the appellant might not be the grand prize winner had been withheld from him by the respondents or, at the very least, had been “buried in a sea of text” with the expectation that his enthusiasm would induce him to subscribe to Time magazine (para. 39).

In Cohen J.’s opinion, the failure to reveal such an important fact was contrary to s. 228 C.P.A. She summed up her view on the presence of false or misleading information in the Document as follows: “It is patently obvious to any reader that the mailing from Time was not only false and

incomplete, it was specifically designed to be misleading, both in the words chosen, the size of the conditions or disclaimers and theirambiguity, especially to a person who is not reading in his or her mother tongue” (para. 40). [19] Cohen J. added that she did not need to determine whether the appellant had actually been misled by the content ofthe Document (para. 49).

To hold that a commercial representation is a practice prohibited by the C.P.A., it is sufficient for a court tofind that the average consumer, that is, one who is credulous and inexperienced, could be misled: There can be no doubt here that the unsolicited publicity sent to Mr. Richard indeed had the capacity to mislead if viewedthrough the eyes of the average, inexperienced French-speaking consumer in Quebec. In any event, the testimony of Mr.

Richard made itclear that he would never have read the subscription portion of the document had the misleading representations not been present,making it obvious that his paid subscription to Time Magazine was a direct result of these misleading representations in the present case. [para. 49] [20] According to Cohen J., the respondents’ advertising strategy, as revealed by the content of the Document, involvedthe use of practices prohibited by Title II of the C.P.A.

As a result, the civil sanctions provided for in s. 272 C.P.A. were available. [21] Relying on the principles adopted by the Quebec Court of Appeal in Nichols v. Toyota Drummondville (1982) inc., (QC CA), [1995] R.J.Q. 746, Cohen J. stated that, in certain circumstances, punitive damages can be awarded unders. 272 C.P.A. in the absence of prejudice to the consumer, that is, even if compensatory damages are not awarded at the same time(para. 55).

In any event, she found that the evidence in the record showed that the appellant had suffered moral injuries — difficultysleeping and embarrassment in his relations with the people around him — as a result of the respondents’ refusal to pay him the grandprize (para. 57). Cohen J. set the value of those moral injuries at $1,000. [22] Next, Cohen J. stated that it was appropriate in this case to award the appellant punitive damages in addition to thecompensatory damages.

On the issue of the quantum of punitive damages, she added that art. 1621 C.C.Q. required the court to considerall the circumstances, including the debtor’s patrimonial situation and the gravity of the debtor’s fault. In discussing the gravity of thefault, Cohen J. held that the respondents had failed to fulfil the obligations imposed on them by the C.P.A. by sending “thousands ofthese false and misleading mailings to francophone consumers in Quebec” (para. 59). She added that the respondents had also violatedthe Charter of the French language, R.S.Q., c.

C-11, by sending the appellant advertising material in English only (para. 64). In herview, such a violation of the Charter of the French language could be taken into consideration in assessing the quantum of punitivedamages awarded under s. 272 C.P.A. (para. 66). [23] Furthermore, Cohen J. stated that the sweepstakes advertising method was quite lucrative for the respondents.

Shenoted that, although the quantum of punitive damages should not convey the impression that the court in this case was using thosedamages to indirectly uphold the contractual portion of the appellant’s claim, the quantum nonetheless had to reflect the deterrentfunction of such damages and take the respondents’ patrimonial situation into account.

Exercising her judicial discretion, she fixed thequantum of the punitive damages awarded to the appellant at $100,000, which corresponded to the value of the “Bonus” prize to whichthe appellant would have been entitled if he had had the winning entry and returned the reply coupon within five days. [24] Cohen J. further ordered, again exercising her judicial discretion, that the costs awarded to the appellant becalculated on the basis of the value of the action “as instituted”, namely $1,250,887.10, thus enabling the appellant to be reimbursed aportion of his judicial and extrajudicial costs, including the fees paid to his attorneys (para. 73).

B. Quebec Court of Appeal (2009 QCCA 2378, [2010] R.J.Q. 3, Chamberland, Morin and Rochon JJ.A.) [25] Both parties appealed the Superior Court’s decision. The Quebec Court of Appeal, in reasons written byChamberland J.A., allowed the respondents’ appeal and dismissed the incidental appeal. It thus dismissed the appellant’s recourse indamages in its entirety, but without costs because of the nature of the case and the novelty of the issues (para. 53). [26] The Court of Appeal began by dismissing the appellant’s incidental appeal with respect to the payment of the prize.

That conclusion is no longer being challenged. The principal issue concerned the award of compensatory and punitive damages againstthe respondents. [27] The Court of Appeal held, contrary to the respondents’ argument, that the C.P.A. was applicable in this case. Chamberland J.A. pointed out that s. 217 C.P.A. clearly states that the fact that a prohibited practice has been used is not subordinate towhether or not a contract has been made (para. 25).

He added that in any event, the parties had in fact formed a contractual relationshipby means of the offer to participate in a sweepstakes and the acceptance of that offer in the form of the return of the reply coupon(para. 26). [28] Following those initial findings, the Court of Appeal concluded that the respondents had not violated the C.P.A.

First, in its view, the respondents had not violated s. 228 C.P.A. by failing to indicate clearly in the Document that the appellant mightnot be the grand prize winner (para. 28). [29] Next, the Court of Appeal held that using the name of a fictitious person, Elizabeth Matthews, as the signer of theDocument did not contravene s. 238(

c) C.P.A. The use of a “pen name” did not on its own have the potential to mislead consumers aboutthe merchant’s identity and was simply intended to [translation] “personalize” the mailings (para. 29). [30] Finally, Chamberland J.A. disagreed with Cohen J.’s view that the Document contained false or misleadingrepresentations contrary to s. 219 C.P.A. The Court of Appeal stated that it could not conclude that the Document might give the averageQuebec consumer the general impression that the recipient was the grand prize winner (paras. 49-50).

The court was not even critical ofthe respondents’ conduct: [translation] With respect, I see eye-catching text in the documentation sent to the [appellant], but I do not see anymisleading, underhanded or deceitful statements. I even suspect that the [appellant], a well-informed businessman who worked locally

and internationally in both French and English, understood the sweepstakes and his chances of winning perfectly well from the very start. [para. 51] [ 31 ] According to the Court of Appeal, there were no false or misleading representations in the Document. Although the court seemed to acknowledge that the Document’s eye-catching headings might initially convey the impression that the appellant had just won the grand prize, it expressed the view that a careful reading of the Document was sufficient to dispel that impression.

It is, in a word, up to consumers to be suspicious of advertisements that seem too good to be true. For these reasons, the Court of Appeal set aside the award of compensatory and punitive damages against the respondents. IV. Analysis A. Issues [ 32 ] This appeal raises the following issues: 1. What is the proper approach in Quebec for determining whether an advertisement constitutes a false or misleading representation for the purposes of the Consumer Protection Act ? 2. In the absence of a contract referred to in s. 2 C.P.A. , can a consumer exercise a recourse in damages under s. 272 C.P.A. ? 3.

What are the conditions for exercising the recourse in punitive damages provided for in s. 272 C.P.A. ? 4. Should punitive damages be awarded in this case and, if so, what criteria should be considered in determining their quantum? B. Review of the General Objectives of Consumer Law and the Structure of the C.P.A. [ 33 ] For the purposes of this appeal, this Court must interpret certain core components of the legal scheme established by the C.P.A.

As we mentioned above, we must define the characteristics of the prohibition against certain advertising practices and the conditions for exercising the recourse provided for in s. 272 C.P.A. where that prohibition has been violated. For this, a brief review of the objectives of modern consumer law and the origins of that law in Quebec and Canada will be helpful.

(1) Rise of the Consumer Society and Its Impact on the Normative Environment of Consumer Protection [ 34 ] Historically, the Canadian consumer protection legislation was originally focused on protecting consumers from [ translation ] “abuses of power” by merchants (L.-A.

Couture, “Rapport sur la protection du consommateur au niveau fédéral en droit pénal canadien”, in Travaux de l’Association Henri Capitant des amis de la culture juridique française , vol. 24, La protection des consommateurs (1975), 303, at p. 307). [ 35 ] Preserving a competitive economic environment remained central to Canadian consumer protection mechanisms until the mid-20th century. Consumer protection remained indirect in nature: for example, federal legislation was focused more on regulating the Canadian economy at a structural level than on directly protecting consumers’ interests (see J.-L.

Baudouin, “Rapport général”, in Travaux de l’Association Henri Capitant des amis de la culture juridique française , vol. 24, La protection des consommateurs (1975), 3, at p. 4). [ 36 ] With the rise of the consumer society after World War II, however, new concerns came to the fore with respect, in particular, to the increased vulnerability of consumers (N. L’Heureux and M. Lacoursière, Droit de la consommation (6th ed. 2011), at pp. 1-4). [ 37 ] Changes in the marketplace led to the realization that consumers needed to be better protected.

In fact, the liberalization of markets favoured the emergence of systems focused more on protecting consumers (see Baudouin, at pp. 3-4; see also Prebushewski v. Dodge City Auto

(1984) Ltd. , 2005 SCC 28 , [2005] 1 S.C.R. 649, at para. 33 ). [ 38 ] Both the Parliament of Canada and the Quebec legislature tried to resolve the problems raised by the new consumer society. Within the Canadian constitutional framework, Parliament and the legislatures have all played important — and often complementary — roles in this regard. We will not dwell here on the measures adopted by Parliament.

Instead, we will be focusing on the Quebec legislation and on how it has developed. [ 39 ] The rise of the consumer society called attention to the limits of the general law in Quebec, as in the other Canadian provinces. In Quebec, the contractual fairness model based on freedom of contract, consensualism and the binding force of contracts seemed increasingly unsuited to ensuring real equality between merchants and consumers.

When the Quebec legislature first became involved in this area, its goal was to develop a new model of contractual fairness based on a scheme of public order that would be an exception to the traditional rules of the general law (see Baudouin, at p. 5). [ 40 ] Quebec consumer law has essentially centred around two successive consumer protection statutes enacted in 1971 and 1978, which were subsequently supplemented by the inclusion of certain provisions of public order in the Civil Code of Québec .

The first Consumer Protection Act (S.Q. 1971, c. 74) applied only to contracts involving credit and distance contracts, and did not deal separately with business practices. In reality, advertising was regulated only indirectly by means of a legal fiction incorporating its content as a term of the resulting contract. Within just a few years after the first Act came into force, it had become obvious that the solution adopted by the legislature needed to be reviewed. [ 41 ] Today’s Consumer Protection Act establishes a much more elaborate legal scheme than the previous version did.

Its enactment reflects the Quebec legislature’s desire to extend the protection of the C.P.A. to a broader range of contracts and to explicitly regulate certain business practices that are considered fraudulent as regards their effect on consumers. In practical terms, the Act is divided into seven titles that reflect the main concerns of Quebec consumer law. Title I, “Contracts Regarding Goods and Services”,

contains provisions whose primary purpose is to restore the contractual balance between merchants and consumers. Title II, “BusinessPractices”, identifies certain types of business conduct as prohibited practices in order to ensure the veracity of information provided toconsumers through advertising or otherwise. [42] These two main titles are supplemented by, among others, Title IV, which sets out the civil and penal recourses thatcan be exercised to sanction violations of the Act by merchants.

Aside from the recourse provided for in s. 272 C.P.A., on which thisappeal is focused, the main recourses are as follows: a demand by a consumer for the nullity of a contract (s. 271 C.P.A.), a penalproceeding instituted by the Director of Criminal and Penal Prosecutions (s. 277 C.P.A.) and an application for an interlocutory orpermanent injunction by the Attorney General of Quebec, the president of the Office de la protection du consommateur (“Office”) or alegal person that is a consumer advocacy body (ss. 290, 310 and 316 C.P.A.).

The president of the Office may also negotiate a voluntaryundertaking by a merchant to comply with the Act (s. 314 C.P.A.).

(2) Protection Against False or Misleading Advertising [43] The measures to protect consumers from fraudulent advertising practices are one expression of a legislative intent tomove away from the maxim caveat emptor, or “let the buyer beware”. As a result of these measures, merchants, manufacturers andadvertisers are responsible for the veracity of information they provide to consumers and may, should such information containfalsehoods, incur the civil or penal consequences provided for in the legislation. As Judge Matheson of the Ontario County Courtexplained in R. v.

Colgate-Palmolive Ltd., (ON SC), [1970] 1 C.C.C. 100, a case involving federal law, the maximcaveat venditor is now far more appropriate to describe the merchant-consumer relationship. In an oft-cited judgment, he wrote thefollowing: This legislation is the expression of a social purpose, namely the establishment of more ethical trade practices calculated toafford greater protection to the consuming public. It represents the will of the people of Canada that the old maxim caveat emptor, letthe purchaser beware, yield somewhat to the more enlightened view caveat venditor — let the seller beware. [p. 102]

(3) Protection Against False or Misleading Representations in the C.P.A. [44] One of the main objectives of Title II of the C.P.A. is to protect consumers from false or misleading representations. Many of the practices it prohibits relate to the veracity of information provided to consumers.

Section 219 C.P.A. sets out this objectivein very clear language. It provides, quite generally, that no merchant, manufacturer or advertiser may make false or misleadingrepresentations to a consumer by any means whatever. The word “representation” is defined in s. 216 C.P.A. as including an affirmation,behaviour or an omission.

Section 219 C.P.A. is supplemented by prohibitions relating to certain specific types of representations(ss. 220 to 251 C.P.A.). [45]

Section 218 C.P.A. guides the application of all these provisions of Title II. It explains the approach to be used todetermine whether a representation is to be considered a prohibited practice. Its wording is based to a large extent on that of s. 52(4) ofthe Combines Investigation Act, R.S.C. 1985, c. C-23, a slightly different version of which can now be found in s. 52(4) of theCompetition Act, R.S.C. 1985, c. C-34.

Section 218 C.P.A. reads as follows: 218. To determine whether or not a representation constitutes a prohibited practice, the general impression it gives, and, asthe case may be, the literal meaning of the terms used therein must be taken into account. [46] The analytical approach provided for in s. 218 C.P.A. requires the consideration of two factors: the “generalimpression” given by a representation and the “literal meaning” of the words used in it. We will review the requirements of each of thesetwo factors. [47] The phrase “literal meaning of the terms used therein” does not raise any

interpretation problems. It simply meansthat every word used in a representation must be interpreted in its ordinary sense. The purpose of this part of s. 218 C.P.A. is to prohibitmerchants from raising a defence based on a subtle, technical or convoluted meaning of a word used in a representation. Thelegislature’s intention was thus that the meanings given to words used in representations be the same as their meanings in everyday life. [48] What is meant by the expression “general impression” requires further explanation, however. Although there havebeen few cases on this point, the courts seem in some recent decisions to have established more explicit principles from which apredominant

interpretation can be drawn. [49] One of these principles that has recently been developed more clearly by the Quebec courts relates to the abstractnature of the analysis of the general impression given by a representation. Influenced by Professor L’Heureux’s comments on this point,the courts now seem to accept, as did the courts below in the instant case, that the “general impression” conveyed by a representationmust be analysed in the abstract, that is, without considering the personal attributes of the consumer who has instituted proceedings against the merchant. (See Québec (Procureur général) v.

Distribution Canovex Inc., [1996] J.Q. no 5302 (QL) (C.Q. (Crim. & Pen.Div.)), at paras. 39-40; Option Consommateurs v. Brick Warehouse, l.p., 2011 QCCS 569 , at paras. 71-73; N. L’Heureux, Droitde la consommation (5th ed. 2000), at p. 347. See also Tremblay v. Ameublements Tanguay inc., 2011 QCCS 3078 , at para. 97;and L’Heureux and Lacoursière, at pp. 489-90.) [50] This approach is consistent with the spirit of the C.P.A., whose main objective is to protect consumers. The courtsmust therefore be able to sanction any representation that, from an objective standpoint, constitutes a prohibited practice.

Whether acommercial representation did or did not cause prejudice to one or more consumers is not relevant to the determination of whether amerchant engaged in a prohibited practice within the meaning of Title II of the C.P.A. The C.P.A. is concerned not only with remedyingthe harm caused to consumers by false or misleading representations, but also with preventing the distribution of advertisements thatcould mislead consumers and possibly cause them various types of prejudice. [51] In sum, this is the objective being pursued in requiring that an abstract analysis be conducted under s. 218 C.P.A.

This approach takes account of the concrete impact that advertising can have on consumers in their everyday lives. Professor

Claude Masse has written the following on this subject: [ translation ] Commercial advertising often plays on the general impression that may be conveyed by an advertisement and even on the literal meaning of the terms used. Information in advertisements is transmitted quickly. Advertising relies on the image and the impression of the moment. This general impression is often what is sought in advertising. By definition, consumers do not have time to think at length about the real meaning of the messages being conveyed to them or about whether words are being used in their literal sense.

The content of advertising is taken seriously in consumer law. Consumers do not have to wonder whether or not the promises made to them or the undertakings given are realistic, serious or plausible. Merchants, manufacturers and advertisers are therefore bound by the content of messages actually conveyed to consumers. [Emphasis added.] (

Loi sur la protection du consommateur: analyse et commentaires (1999), at p. 828) [ 52 ] The use of the general impression test of s. 218 C.P.A. reflects how, in practice, consumers are very frequently led to exercise their freedom of choice. The question thus becomes how the courts are to determine the general impression conveyed by a commercial representation. The parties have taken very different positions in this Court on the

interpretation of this concept. [ 53 ] The appellant basically argues that the general impression conveyed by a written advertisement must be assessed contextually, that is, by considering both the writing style and the choice of words. He submits that the approach required by s. 218 C.P.A. does not involve considering the words used in an advertisement in isolation from the medium in which they are used.

In other words, the appellant contends that the general impression is based both on the layout of an advertisement and on the meaning of the words used. [ 54 ] The respondents counter that the general impression test must not be likened to an “instant impression” test. They argue that the general impression is not the instant impression conveyed by an advertisement’s layout and that the courts cannot dispense with a careful reading of a written advertisement.

The respondents therefore submit that s. 218 C.P.A. requires an analytical approach that emphasizes the text of an advertisement rather than its layout. [ 55 ] In our opinion, the respondents are wrong to downplay the importance of the layout of an advertisement. It must be remembered that the legislature adopted the general impression test to take account of the techniques and methods that are used in commercial advertising to exert a significant influence on consumer behaviour.

This means that considerable importance must be attached not only to the text but also to the entire context, including the way the text is displayed to the consumer. [ 56 ] However, the respondents are right to say that the general impression referred to in s. 218 C.P.A. is not the impression formed as a result of a rushed or partial reading of an advertisement. The analysis under that provision must take account of the entire advertisement rather than merely of portions of its content.

But it is just as true that the analytical approach required by s. 218 C.P.A. does not involve the minute dissection of the text of an advertisement to determine whether the general impression it conveys is false or misleading. The courts must not approach a written advertisement as if it were a commercial contract by reading it several times, going over every detail to make sure they understand all its subtleties.

Reading over the entire text once should be sufficient to assess the general impression conveyed by a written advertisement, and it is that general impression that will then make it possible to determine whether a representation made by a merchant constitutes a prohibited practice. [ 57 ] In sum, it is our opinion that the test under s. 218 C.P.A. is that of the first impression.

In the case of false or misleading advertising, the general impression is the one a person has after an initial contact with the entire advertisement, and it relates to both the layout of the advertisement and the meaning of the words used. This test is similar to the one that must be applied under the Trade-marks Act , R.S.C. 1985, c. T-13 , to determine whether a trade-mark causes confusion ( Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée , 2006 SCC 23 , [2006] 1 S.C.R. 824, at para. 20 ; Masterpiece Inc. v.

Alavida Lifestyles Inc. , 2011 SCC 27 , [2011] 2 S.C.R. 387, at para. 41 ). [ 58 ] We cannot therefore accept the distinction proposed by the respondents between “instant impression” and “general impression”. In actual fact, the respondents are asking this Court to apply a standard much more exacting than that of the first impression. This conclusion flows necessarily from their position on the application of the general impression test to the facts of the case at bar.

To explain why their advertising strategy does not contravene Title II of the C.P.A. , they state that the “documents . . . were in the possession of [the appellant] for a lengthy period of time and [that he] was able to read them carefully on several occasions before sending in the Official Entry Certificate” (R.F., at para. 46 (emphasis added)). [ 59 ] We will now consider the approach taken by the Court of Appeal in this case in light of the principles discussed above regarding the analytical approach required by s. 218 C.P.A.

With respect, the Court of Appeal seems, in our view, to have favoured an approach that does away with the need to ascertain the general impression conveyed by the Document and replaces it with an opinion resulting from an analysis. In substance, this approach involved dissecting the Document to isolate and connect parts of sentences to reveal the “real message” it conveyed (paras. 45-48).

This led the Court of Appeal to attach excessive importance to the parts of the Document containing phrases such as “[i]f you have and return the Grand Prize winning entry” and “if you hold the Grand Prize winning number” (A.R., vol. II, at p. 59). In so doing, it departed from the general impression test provided for in s. 218 C.P.A. [ 60 ] This dissection of the text by the Court of Appeal resembles the classical civil law approach to contract analysis and strays from the determination of the general impression the entire advertisement conveys to a consumer.

Furthermore, the purpose of Title II of the C.P.A. is to make merchants responsible for the content of their advertisements on the basis of the general impression the advertisements convey. By adopting so exacting a standard in s. 218 C.P.A. , the legislature intended to ensure that consumers could view commercial advertising with confidence rather than suspicion. Thus, the objective of the current legislation is to enable a consumer to assume that the general impression conveyed by an advertisement is accurate and not the opposite.

In sum, the analytical approach chosen by the Court of Appeal for establishing the general impression conveyed by the respondents’ advertisement was inconsistent with the general impression test adopted by the legislature.

(4) Consumer in Issue in Title II of the C.P.A.

[61] The above discussion of the general impression concept leaves an important question unanswered: From whatperspective should the courts assess the general impression conveyed by a commercial representation? Who is the consumer for thepurposes of s. 218 C.P.A.? Answering this question is the second step of the analytical approach required by s. 218 C.P.A. [62] In recent decisions, judges have commonly used the expression “average consumer” to describe the consumer inissue in Title II of the C.P.A.

Of course, the average consumer does not exist, but is the product of a legal fiction personified by animaginary consumer to whom a level of sophistication that reflects the purpose of the C.P.A. is attributed. In the case at bar, the crux ofthe issue is whether the level of sophistication of the average consumer conceptualized by the Court of Appeal is consistent with theobjectives of the C.P.A. [63] The appellant argues that the Court of Appeal erred in defining the average consumer as one with [translation] “anaverage level of intelligence, scepticism and curiosity” (para. 50).

He submits that the Court of Appeal departed from the prevailing lineof authority in Quebec, according to which the average consumer must be considered [translation] “credulous and inexperienced”. Headds that, by stressing the average consumer’s intelligence, scepticism and curiosity, the Court of Appeal proposed a new standard thatcould deprive many consumers of the protection of the C.P.A. (A.F., at para. 40). [64] The respondents argue that the Court of Appeal did not change the definition of the average consumer.

In their view,Chamberland J.A. simply pointed out that the average consumer, although credulous, is not completely unintelligent. He did not changethe requirements of s. 218 C.P.A. (R.F., at paras. 28 and 32). [65] The C.P.A. is one of a number of statutes enacted to protect Canadian consumers. The courts that have applied thesestatutes have often used the average consumer test.

In conformity with the objective of protection that underlies such legislation, thecourts have assumed that the average consumer is not very sophisticated. [66] This Court’s decisions relating to trade-marks provide a good example of this interpretive approach. In Mattel, Inc.v. 3894207 Canada Inc., 2006 SCC 22, [2006] 1 S.C.R. 772, the Court was asked to clarify the standard to be used by the courts todetermine whether a trade-mark causes confusion with a registered trade-mark.

Binnie J., writing for the Court, concluded that theaverage consumers protected by the Trade-marks Act are “ordinary hurried purchasers” (para. 56).

He explained that “[t]he standard isnot that of people ‘who never notice anything’ but of persons who take no more than ‘ordinary care to observe that which is staring themin the face’” (para. 58). [67] The general impression test provided for in s. 218 C.P.A. must be applied from a perspective similar to that of“ordinary hurried purchasers”, that is, consumers who take no more than ordinary care to observe that which is staring them in the faceupon their first contact with an advertisement.

The courts must not conduct their analysis from the perspective of a careful and diligentconsumer. [68] Obviously, the adjectives used to describe the average consumer may vary from one statute to another. Suchvariations reflect the diversity of economic realities to which different statutes apply and of their objectives.

The most important thing isnot the adjectives used, but the level of sophistication expected of the consumer. [69] In applying the general impression test provided for in s. 218 C.P.A., the Quebec courts have traditionally used thewords “credulous” and “inexperienced” to describe the consumer in issue in the Act, relying on R. v. Imperial Tobacco Products Ltd.,1971 ALTASCAD 44 , [1971] 5 W.W.R. 409 (Alta. S.C., A.D.), to incorporate the “credulous and inexperienced person”concept into Title II of the C.P.A. (Masse, at p. 828).

After the courts had referred to this concept occasionally in the 1980s and 1990s,including in P.G. du Québec v. Louis Bédard Inc., 1986 CarswellQue 981 (Ct. Sess. P.), the Quebec Court of Appeal rendered alandmark decision on this question in Turgeon v. Germain Pelletier ltée, (QC CA), [2001] R.J.Q. 291, in which itconfirmed that the “credulous and inexperienced” consumer test is applicable in Quebec consumer law. Fish J.A., as he then was, wrotethe following on this point: [translation] As my colleague Gendreau J.A. pointed out in Nichols v.

Toyota Drummondville (1982) inc., the ConsumerProtection Act is a statute of public order whose purpose is to restore the contractual [balance] between merchants and their customers. The credulous and inexperienced person test must be used to assess the misleading nature of the advertising and business practices towhich the Consumer Protection Act applies. [Emphasis added; para. 36.] [70] Since then, trial courts in Quebec have followed Turgeon, including in several class actions based on the C.P.A. (seeRiendeau v.

Brault & Martineau inc., 2007 QCCS 4603, [2007] R.J.Q. 2620, at para. 149, aff’d by 2010 QCCA 366, [2010] R.J.Q. 507;Adams v. Amex Bank of Canada, 2009 QCCS 2695, [2009] R.J.Q. 1746, at para. 126; Marcotte v. Banque de Montréal, 2009 QCCS2764 , at para. 357; Marcotte v. Fédération des caisses Desjardins du Québec, 2009 QCCS 2743 , at para. 257).

Insum, it is clear that, since Turgeon, the “general impression” referred to in s. 218 C.P.A. is the impression of a commercial representationon a credulous and inexperienced consumer. [71] Thus, in Quebec consumer law, the expression “average consumer” does not refer to a reasonably prudent anddiligent person, let alone a well-informed person.

To meet the objectives of the C.P.A., the courts view the average consumer assomeone who is not particularly experienced at detecting the falsehoods or subtleties found in commercial representations. [72] The words “credulous and inexperienced” therefore describe the average consumer for the purposes of the C.P.A. This description of the average consumer is consistent with the legislature’s intention to protect vulnerable persons from the dangers ofcertain advertising techniques.

The word “credulous” reflects the fact that the average consumer is prepared to trust merchants on thebasis of the general impression conveyed to him or her by their advertisements.

However, it does not suggest that the average consumeris incapable of understanding the literal meaning of the words used in an advertisement if the general layout of the advertisement doesnot render those words unintelligible. [73] We must therefore find that the Court of Appeal changed the standard of the average consumer for the purposes ofTitle II of the C.P.A. and that its decision was incompatible with the C.P.A.’s objective of protecting consumers. In our opinion, defining

the average consumer as having [ translation ] “an average level of intelligence, scepticism and curiosity” is inconsistent with the letter and the spirit of s. 218 C.P.A. Such a definition raises a number of problems. [ 74 ] First, the words “average level of intelligence” suggest that the consumer the legislature wanted to protect in Title II of the C.P.A. is a consumer who has the same level of sophistication as the average person. As we mentioned above, consumer law does not protect consumers only if they have proven to be prudent and well informed.

The C.P.A. ’s general objective of protecting consumers means that the appropriate test is not that of the prudent and diligent consumer. [ 75 ] Moreover, from a practical standpoint, this part of the definition proposed by Chamberland J.A. is not really compatible with the abstract analysis required by s. 218 C.P.A. , since the use of a standard like that of the “consumer with an average level of intelligence” could lead the courts to adopt a test based on determining the level of sophistication of the consumer in question in a given case.

Such a test would make it possible to exonerate a merchant who is lucky enough to be sued by a consumer of above-average intelligence. The court’s role would then be to determine whether the consumer exercising the recourse was in fact misled rather than whether the advertisement in question constituted a false or misleading representation. This would decrease the level of protection provided to consumers by the C.P.A. [ 76 ] Next, the words “average level of . . . scepticism” replace the general impression test with a test based on the opinion formed after a more thorough analysis.

It invites the courts to assume that the average consumer must take concrete action to find the “real message” hidden behind an advertisement that seems advantageous. This analytical approach can only weaken the general impression test, since a sceptical person will be inclined not to believe an advertisement solely on the basis of the general impression it conveys. A sceptical person will doubt, ask questions and perhaps make his or her own inquiries.

If, at the end of that process, the person concludes that the content of the advertisement is true to reality, his or her assessment will be based not on the general impression conveyed by the advertisement but on the concrete action he or she has taken. [ 77 ] The above comments also apply to the “average level of . . . curiosity” the average consumer must be presumed to have, according to the Court of Appeal. With respect, the use of this expression rests on the same incorrect premise as does that with respect to the scepticism of the average consumer.

A consumer with “an average level of . . . curiosity” will not be so stupid or naïve as to rely on the first impression conveyed by a commercial representation but will be curious enough to consider that impression more closely. He or she will try to determine whether the general impression conveyed by an advertisement is actually true to reality. On this point, we reiterate that the purpose of Title II of the C.P.A. is to make it possible for consumers to trust the general impression given by merchants in their advertisements.

If this general impression is not true to reality, the advertisement in question constitutes a false or misleading representation and the merchant has engaged in a prohibited practice for the purposes of the C.P.A. , regardless of whether the “real message” of the advertisement could be understood by analysing it in depth. In fact, the Court of Appeal’s

interpretation of the average consumer concept is closer to that of the diligent person, which is neither mentioned in the Act nor in keeping with its spirit. [ 78 ] For all these reasons, we cannot endorse the definition of the average consumer proposed by the Court of Appeal. In our opinion, the concept of the credulous and inexperienced consumer applied by the Quebec courts in the line of authority that prevailed before the judgment of the Court of Appeal in the instant case is more consistent with the Quebec legislature’s objective of protecting consumers from false or misleading advertising.

A court asked to assess the veracity of a commercial representation must therefore engage, under s. 218 C.P.A. , in a two-step analysis that involves — having regard, provided that the representation lends itself to such an analysis, to the literal meaning of the words used by the merchant — (1) describing the general impression that the representation is likely to convey to a credulous and inexperienced consumer; and (2) determining whether that general impression is true to reality. If the answer at the second step is no, the merchant has engaged in a prohibited practice. C.

Consistency of the Court of Appeal’s Judgment with the C.P.A. [ 79 ] What must now be determined is whether, in light of these principles, the Court of Appeal was right to reverse the trial judge’s finding that the Document contained representations that contravened certain provisions of Title II of the C.P.A. Cohen J. identified three violations of that Act. We will consider the alleged violations of ss. 219 and 228 C.P.A. together, since they concern different aspects of a single reality that cannot easily be separated from one another. We will discuss the alleged violation of s. 238 (

c) C.P.A. separately.

(1) Alleged Violation of Sections 219 and 228 C.P.A. [ 80 ] Sections 219 and 228 C.P.A. read as follows: 219. No merchant, manufacturer or advertiser may, by any means whatever, make false or misleading representations to a consumer. 228.

No merchant, manufacturer or advertiser may fail to mention an important fact in any representation made to a consumer. [ 81 ] In the instant case, the alleged violation of s. 219 C.P.A. lay in the fact that the Document falsely stated that the appellant was the grand prize winner, while the alleged violation of s. 228 C.P.A. related specifically to the respondents’ failure to reveal in the Document that the appellant might not be the grand prize winner.

These two allegations therefore raise the question whether a credulous and inexperienced consumer, after first reading the Document, would have been under the general impression that the appellant had won the grand prize or would instead have understood that the respondents were merely offering him an opportunity to participate in a contest with a minute chance of winning a cash prize. [ 82 ] The “real message” the respondents wanted to convey by sending the Document must be explained here. The sweepstakes in issue was a contest in which only one person would win the grand prize.

To receive the prize, the person had to have the winning entry, return the reply coupon by the deadline and correctly answer a skill-testing question. Only one person had the winning entry, which had been selected before the mailings were sent. However, at the top of each recipient’s document, the word “claim” appeared, followed by a combination of numbers and letters. In the event that the pre-selected winner failed to return the reply coupon, a

draw would be held for the grand prize among all those who had returned it. [ 83 ] According to the respondents, the average consumer would be capable of understanding the following after reading once through the documentation received by the appellant: (1) the appellant had received number GV1T7IU62; (2) that number was not necessarily the winning number; (3) if his number was not the pre-selected number, his chances of winning were extremely small; (4) for him to have any chance of winning, the holder of the winning entry would have to fail to return his or her reply coupon, in which case a random draw would be held among all those who

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