2012 QCCA 1396, 2012 QCCA 1396

Unofficial English Translation Banque de Montréal c. Marcotte 2012 QCCA 1396 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No.: 500-09-019849-090; 500-09-019850-098; 500-09-019851-096; 500-09-019852-094, 500-09-019853-092; 500-09-019854-090; 500-09-019855-097; 500-09-019856-095; 500-09-019857-093; (500-06-000197-034) DATE: August 2, 2012 CORAM: THE HONOURABLE ANDRÉ FORGET, J.A. PIERRE J. DALPHOND, J.A MARIE-FRANCE BICH, J.A. File no.: 500-09-019849-090 BANK OF MONTREAL APPELLANT – Defendant v.

RÉAL MARCOTTE and BERNARD LAPARÉ RESPONDENTS – Plaintiffs and AMEX BANK OF CANADA, ROYAL BANK OF CANADA, TORONTO-DOMINION BANK, CANADIAN IMPERIAL BANK OF COMMERCE, SCOTIABANK, NATIONAL BANK OF CANADA, LAURENTIAN BANK OF CANADA, CITIBANK CANADA IMPLEADED PARTIES – Defendants and ATTORNEY GENERAL OF CANADA INTERVENER and ATTORNEY GENERAL OF QUEBEC and PRESIDENT OF THE OFFICE DE LA PROTECTION DU CONSOMMATEUR IMPLEADED PARTIES – Interveners ______________________________________________________________________ File no.: 500-09-019850-098 CITIBANK CANADA APPELLANT – Defendant v.

RÉAL MARCOTTE and BERNARD LAPARÉ RESPONDENTS – Plaintiffs and BANK OF MONTREAL, TORONTO-DOMINION BANK, CANADIAN IMPERIAL BANK OF COMMERCE, SCOTIABANK, NATIONAL BANK OF CANADA, LAURENTIAN BANK OF CANADA, ROYAL BANK OF CANADA, AMEX BANK OF CANADA IMPLEADED PARTIES – Defendants and ATTORNEY GENERAL OF CANADA

INTERVENER and ATTORNEY GENERAL OF QUEBEC and PRESIDENT OF THE OFFICE DE LA PROTECTION DU CONSOMMATEUR IMPLEADED PARTY – Interveners ______________________________________________________________________ File no.: 500-09-019851-096 TORONTO-DOMINION BANK APPELLANT – Defendant v.

RÉAL MARCOTTE and BERNARD LAPARÉ RESPONDENTS – Plaintiffs and BANK OF MONTREAL, ROYAL BANK OF CANADA, NATIONAL BANK OF CANADA, SCOTIABANK, CANADIAN IMPERIAL BANK OF COMMERCE, LAURENTIAN BANK OF CANADA, AMEX BANK OF CANADA, CITIBANK CANADA IMPLEADED PARTIES – Defendants and ATTORNEY GENERAL OF CANADA INTERVENER and ATTORNEY GENERAL OF QUEBEC and PRESIDENT OF THE OFFICE DE LA PROTECTION DU CONSOMMATEUR IMPLEADED PARTIES – Interveners ______________________________________________________________________ File no.: 500-09-019852-094 CANADIAN IMPERIAL BANK OF COMMERCE APPELLANT – Defendant v.

RÉAL MARCOTTE and BERNARD LAPARÉ RESPONDENTS – Plaintiffs and BANK OF MONTREAL, ROYAL BANK OF CANADA, TORONTO-DOMINION BANK, SCOTIABANK, NATIONAL BANK OF CANADA, AMEX BANK OF CANADA, CITIBANK CANADA, LAURENTIAN BANK OF CANADA IMPLEADED PARTIES – Defendants and ATTORNEY GENERAL OF CANADA INTERVENER and ATTORNEY GENERAL OF QUEBEC and PRESIDENT OF THE OFFICE DE LA PROTECTION DU CONSOMMATEUR IMPLEADED PARTIES – Interveners ______________________________________________________________________ File no.: 500-09-019853-092 AMEX BANK OF CANADA APPELLANT – Defendant v.

RÉAL MARCOTTE and BERNARD LAPARÉ RESPONDENTS – Plaintiffs and BANK OF MONTREAL, ROYAL BANK OF CANADA, TORONTO-DOMINION BANK, NATIONAL BANK OF CANADA, SCOTIABANK, CANADIAN IMPERIAL BANK OF COMMERCE, LAURENTIAN BANK OF CANADA, CITIBANK CANADA

IMPLEADED PARTIES – Defendants and ATTORNEY GENERAL OF CANADA INTERVENER and ATTORNEY GENERAL OF QUEBEC and PRESIDENT OF THE OFFICE DE LA PROTECTION DU CONSOMMATEUR IMPLEADED PARTIES – Interveners ______________________________________________________________________ File no.: 500-09-019854-090 LAURENTIAN BANK OF CANADA APPELLANT – Defendant v.

RÉAL MARCOTTE and BERNARD LAPARÉ RESPONDENTS – Plaintiffs and BANK OF MONTREAL, ROYAL BANK OF CANADA, TORONTO-DOMINION BANK, CANADIAN IMPERIAL BANK OF COMMERCE, SCOTIABANK, NATIONAL BANK OF CANADA, AMEX BANK OF CANADA, CITIBANK CANADA IMPLEADED PARTIES – Defendants and ATTORNEY GENERAL OF CANADA INTERVENER and ATTORNEY GENERAL OF QUEBEC and PRESIDENT OF THE OFFICE DE LA PROTECTION DU CONSOMMATEUR IMPLEADED PARTIES – Interveners ______________________________________________________________________ File no.: 500-09-019855-097 NATIONAL BANK OF CANADA APPELLANT – Defendant v.

RÉAL MARCOTTE and BERNARD LAPARÉ RESPONDENTS – Plaintiffs and BANK OF MONTREAL, ROYAL BANK OF CANADA, TORONTO-DOMINION BANK, CANADIAN IMPERIAL BANK OF COMMERCE, SCOTIABANK, LAURENTIAN BANK OF CANADA, AMEX BANK OF CANADA, CITIBANK CANADA IMPLEADED PARTIES – Defendants and ATTORNEY GENERAL OF CANADA INTERVENER and ATTORNEY GENERAL OF QUEBEC and PRESIDENT OF THE OFFICE DE LA PROTECTION DU CONSOMMATEUR IMPLEADED PARTIES – Interveners ______________________________________________________________________ File no.: 500-09-019856-095 SCOTIABANK

APPELLANT – Defendant v. RÉAL MARCOTTE and BERNARD LAPARÉ RESPONDENTS – Plaintiffs and BANK OF MONTREAL, ROYAL BANK OF CANADA, TORONTO-DOMINION BANK, CANADIAN IMPERIAL BANK OF COMMERCE, NATIONAL BANK OF CANADA, LAURENTIAN BANK OF CANADA, AMEX BANK OF CANADA, CITIBANK CANADA IMPLEADED PARTIES – Defendants and ATTORNEY GENERAL OF CANADA INTERVENER and ATTORNEY GENERAL OF QUEBEC and PRESIDENT OF THE OFFICE DE LA PROTECTION DU CONSOMMATEUR IMPLEADED PARTIES – Interveners ______________________________________________________________________ File no.: 500-09-019857-093 ROYAL BANK OF CANADA APPELLANT – Defendant v.

RÉAL MARCOTTE and BERNARD LAPARÉ RESPONDENTS – Plaintiffs and BANK OF MONTREAL, TORONTO-DOMINION BANK, CANADIAN IMPERIAL BANK OF COMMERCE, SCOTIABANK, NATIONAL BANK OF CANADA, LAURENTIAN BANK OF CANADA, AMEX BANK OF CANADA, CITIBANK CANADA IMPLEADED PARTIES – Defendants and ATTORNEY GENERAL OF CANADA INTERVENER and ATTORNEY GENERAL OF QUEBEC and PRESIDENT OF THE OFFICE DE LA PROTECTION DU CONSOMMATEUR IMPLEADED PARTIES – Interveners JUDGMENT [ 1 ] The appellants appeal from a judgment rendered on June 11, 2009, by the Superior Court, District of Montreal (the Honourable Mr.

Justice Clément Gascon), which allowed the class action brought against them on the grounds that they violated the Consumer Protection Act with respect to credit charges when they invoiced certain amounts to their clients who made foreign currency payments. [ 2 ] For the reasons of Dalphond J.A., with which Forget and Bich JJ.A. agree: In file 500-09-019852-094 (Canadian Imperial Bank of Commerce): [ 3 ] ALLOWS the appeal, with costs against the respondents; [ 4 ] SETS ASIDE the parts of the judgment of the Superior Court respecting the Canadian Imperial Bank of Commerce and, proceeding to render the judgment that should have been rendered, DISMISSES the class action against it, with costs.

In file 500-09-019854-090 (Laurentian Bank of Canada): [ 5 ] ALLOWS the appeal, with costs against the respondents;

[ 6 ] SETS ASIDE the parts of the judgment of the Superior Court respecting the Laurentian Bank of Canada and, proceeding to render the judgment that should have been rendered, DISMISSES the class action against it, with costs. In file 500-09-019856-095 (Scotiabank): [ 7 ] ALLOWS the appeal, with costs against the respondents; [ 8 ] SETS ASIDE the parts of the judgment of the Superior Court respecting the Scotiabank and, proceeding to render the judgment that should have been rendered, DISMISSES the class action against it, with costs.

In file 500-09-019857-093 (Royal Bank of Canada): [ 9 ] ALLOWS the appeal, with costs against the respondents; [ 10 ] SETS ASIDE the parts of the judgment of the Superior Court respecting the Royal Bank of Canada and, proceeding to render the judgment that should have been rendered, DISMISSES the class action against it, with costs.

In file 500-09-019853-092 (Amex Bank of Canada): [ 11 ] ALLOWS the appeal, without costs, in light of the circumstances. [ 12 ] SETS ASIDE the parts of the judgment of the Superior Court respecting Amex Bank of Canada and, proceeding to render the judgment that should have been rendered, DISMISSES the class action against it, without costs in light of the circumstances.

In file 500-09-019849-090 (Bank of Montreal): [ 13 ] ALLOWS the appeal, without costs, in light of the circumstances. [ 14 ] SETS ASIDE the parts of the judgment of the Superior Court condemning the Bank of Montreal to pay punitive damages and REDUCES the condemnation subject to collective recovery to $6,109,298, the other parts of the judgment pertaining to the Bank of Montreal remaining unchanged.

In file 500-09-019855-097 (National Bank of Canada): [ 15 ] ALLOWS the appeal, without costs in light of the circumstances. [ 16 ] SETS ASIDE the parts of the judgment of the Superior Court condemning the National Bank of Canada to pay punitive damages and REDUCES the condemnation subject to collective recovery to $6,363,496.41, the other parts of the judgment pertaining to the National Bank of Canada remaining unchanged.

In file 500-09-019850-098 (Citibank Canada): [ 17 ] ALLOWS the appeal, without costs in light of the circumstances. [ 18 ] SETS ASIDE the parts of the judgment of the Superior Court condemning Citibank Canada to pay punitive damages and REDUCES the condemnation subject to collective recovery to $383,132, the other parts of the judgment pertaining to the Citibank Canada remaining unchanged.

In file 500-09-019851-096 (Toronto-Dominion Bank): [ 19 ] ALLOWS the appeal, without costs, for the sole purpose of reducing the period respecting recovery and punitive damages from April 17, 2000 to August 31, 2001, the other parts of the judgment pertaining to Toronto-Dominion Bank remaining unchanged. ANDRÉ FORGET, J.A. PIERRE J. DALPHOND, J.A

MARIE-FRANCE BICH, J.A. Mtre Mahmud Jamal Mtre Éric Préfontaine Mtre Alexandre Fallon Osler, Hoskin & Harcourt and Mtre Stephen W. Hamilton Mtre Julie Girard Stikeman, Elliott and Mtre Sylvain Deslauriers Mtre Alberto Martinez Deslauriers & Co., Attorneys S.A. For Bank of Montreal, Citibank Canada, Toronto-Dominion Bank, Canadian Imperial Bank of Commerce, Amex Bank of Canada, Laurentian Bank of Canada, National Bank of Canada, Scotiabank, and Royal Bank of Canada. Mtre Bruce W. Johnston Mtre Philippe H. Trudel Trudel & Johnston and Mtre André Lespérance, legal counsel Lauzon Bélanger, Lespérance Inc.

For the respondents Réal Marcotte and Bernard Laparé Mtre Marc Migneault Allard, Renaud and Associates For the impleaded party (president of the Office de la protection du consommateur) Mtre Jean-François Jobin Mtre Francis Demers Me Samuel Chayer Bernard, Roy (Justice Quebec) For the impleaded party (Attorney General of Quebec) Mtre Michel Miller Me Jean-Robert Noiseux Joyal, LeBlanc For the intervener Date of hearing: September 12 to15, 2011 REASONS OF DALPHOND, J.A. [ 20 ] These reasons address nine separate appeals stemming from a single judgment allowing a class action against the nine appellant banks.

That judgment determined similar, dare I say identical, questions regarding the collection of charges upon use of a credit card to make foreign currency payments (conversion charges).

BACKGROUND [ 21 ] Any Visa, MasterCard or Amex cardholder who uses their card to pay for purchases in a currency other than Canadian dollars, during a trip abroad, for example, or while making an online purchase from a supplier based abroad, will be invoiced conversion charges based on a set percentage of the converted amount (1.5–2.5% at the time of the proceedings). [ 22 ] The monthly statement sent to cardholders shows the amount paid in foreign currency and the amount added to their account in

Canadian dollars. The conversion rate corresponds to the interbanking exchange rate in effect on the day the payment was charged to the cardholder's account, a rate that is usually unavailable to consumers. The conversion charge rate is then added to the rate. [ 23 ] Réal Marcotte holds a Visa card issued by the Bank of Montreal (BMO). In April of 2003, he filed a first motion for authorization to institute a class action against the nine appellant banks and the Fédération des caisses Desjardins du Québec (Desjardins).

Marcotte does not dispute the usefulness of having the option of paying in a foreign currency, the necessity of then converting the amount paid into Canadian currency (because the credit issued through his card was issued in Canadian dollars), or even the reasonableness of the conversion rates used, but he does argue that all the issuing institutions breached the Consumer Protection Act R.S.Q. c. P-40.1 ( CPA ) by failing to treat the conversion charges as credit charges within the meaning of the Act .

In his view, the conversion charges should have been included in the credit rate [1] indicated in the statements, computed according to the method prescribed in the CPA , and they could not be claimed from clients who paid their account balance in full within the applicable grace period.

He also criticizes five of the banks for having, at certain times, completely failed to disclose the existence of these conversion charges, which is also in breach of the CPA . [ 24 ] Shortly thereafter, the banks, which fall under federal jurisdiction, announced their intention of raising the constitutional inapplicability of the CPA as against them.

Marcotte responded with a second motion for authorization to institute a class action, this time only against Desjardins, and a discontinuance in this file with respect to that financial institution, which falls under provincial jurisdiction. [ 25 ] The class action against Desjardins was authorized on July 5, 2004. After the case was readied for trial, it was brought to the roll in June of 2006, with a hearing scheduled to last twelve days. Unfortunately, the action against the banks did not progress as smoothly.

First, the banks, excepting BMO, questioned Marcotte's capacity to sue them and sought a stay pending this Court's judgment in Pharmascience inc. v. Option Consommateurs , [2005] R.J.Q. 1367, 2005 QCCA 437 , rendered on April 29, 2005.

Then, in May of 2006, faced with the imminent hearing on the merits of the Desjardins file and fearing that a dangerous precedent would result therefrom, they petitioned to have a joint hearing of the two class actions before a single judge. [2] In order to facilitate this joining with the Desjardins file, that trial was postponed and the banks ceased to contest the motion for authorization, which was granted in May of 2006 ( Marcotte v. Bank of Montreal , J.E. 2006-1253, 2006 QCCS 2963 ).

The banks added that they were not, however, waiving the right to argue the representative's absence of interest at a later time. It is important to note that the authorization judgment determined the beginning of the reimbursement period for the charges as being April 17, 2000 (a judgment rendered in March of 2008 determined that the end of this period was December 31, 2007). [ 26 ] On October 18, 2006, the Court rendered Bouchard v. Agropur Coopérative , [2006] R.J.Q. 2349, 2006 QCCA 1342 . Armed with this judgment, Amex Bank of Canada (Amex) served a motion on Marcotte to have the action against it dismissed.

In response, counsel for Marcotte was allowed to amend the motion to institute proceedings in order to add Bernard Laparé, an American Express cardholder, as co-representative and co-plaintiff. Amex’s motion was dismissed ( Marcotte v. Banque de Montréal , [2007] R.J.Q. 158, 2006 QCCS 5497 ).

The seven other banks chose not to present motions similar to Amex's, choosing instead to allege in their respective defences the representatives' absence of legal interest with respect to them. [ 27 ] On November 23, 2007, following a motion for management instructions brought by Desjardins, Gascon J. decided that the two class actions would be heard concurrently. The hearing in question lasted thirty-four days through September, October, and November of 2008. It yielded two very elaborate judgments that were rendered on June 11, 2009. The first was 200 pages long ( Marcotte v.

Bank of Montreal , J.E. 2009-1225, 2009 QCCS 2764 ) and the other was 126 pages long ( Marcotte v. Fédération des caisses Desjardins du Québec , 2009 QCCS 2743 ). [ 28 ] That same day, a third judgment, this one 72 pages long, decided the class action brought by Sylvan Adams against Amex following a trial held in December of 2008 before the same judge ( Adams v. Amex Bank of Canada , [2009] R.J.Q. 1746, 2009 QCCS 2695 ). IMPUGNED JUDGMENT [ 29 ] The judge began by addressing the admissibility of the action against the banks, excepting BMO and Amex. He described the situation as [ translation ] "deplorable".

Why did Marcotte and Laparé not amend their proceedings to include representatives who had contractual relationships with each of the other banks involved? Why did these banks postpone the debate until the very last minute, after over thirty days of hearings? He added that none of the parties offered any convincing explanations, though a modicum of collaboration would have easily solved the problem. [ 30 ] After these remarks, the judge considered the exception to dismiss, which he rejected on several grounds.

First, he pointed out that, contrary to Agropur , which was rendered at the authorization stage, the absence of interest in this case was raised once authorization had been granted, and thus, after it had produced its effects. Prescription was therefore interrupted for all the members of the group (article 2897 C.C.Q. ) and the representatives readied the file for trial. In the judge's opinion, once a class action is authorized, it may no longer be conceived strictly from the representative's point of view and the argument of absence of interest must be analyzed from the perspective of the class.

Second, the judge deemed that the heart of the dispute was the

interpretation of some of the provisions of the CPA in accordance with a factual background common to all the banks, a situation that allowed the representative to subpoena not only the bank with which he did business, but also all those in the same situation, as unanimously decided by this Court in Regroupement des CHSLD Christ-Roi (Centre hospitalier, soins longue duré

e) v. Comité provincial des malades , [2007] R.J.Q. 1753, 2007 QCCA 1068 , which rejected the same argument submitted in the same context. [3] Third, requiring separate class actions against each of the banks would be contrary to the purpose of this type of action and would entail a disturbing waste of judicial resources. Finally, the judge noted that the banks, excepting BMO and Amex, failed to identify any prejudice suffered as a result of the fact that the representatives were Marcotte and Laparé instead of one of their own clients. [ 31 ] On the merits, the judge first stated that the CPA applies to banks, rejecting the argument of federal exclusivity. He then

espoused the respondents' theory that the conversion charges were credit charges within the meaning of the CPA , that they must be included when computing the credit rate and cannot be claimed from cardholders who pay off their monthly balance within the grace period. Furthermore, he found that the BMO, Citibank, Toronto-Dominion bank (TD), Amex, and the National Bank of Canada (BNC) not only computed these conversion charges in a manner that was contrary to the CPA , but for a certain time also concealed their very existence, in breach of

section 12 CPA . [ 32 ] Pursuing his analysis of the CPA , he opined that the appropriate sanctions could not be those set out in

section 272, that is, the reimbursement of the conversion charges. Where the judge deemed adequate evidence to have been adduced, he ordered collective recovery for the aggregate amount of conversion charges invoiced by each of the banks during the relevant period. Where he deemed that there was insufficient evidence, he ordered that the indemnification of the members of the sub-group be subject to individual claims.

Persons entitled to such reimbursements were generally described as being members of the first sub-group, excepting when collective and individual recovery applied to a single bank, in which case two sub-groups were eligible for the reimbursement of conversion charges. [ 33 ] He also ordered the five banks who failed to disclose the fact that conversion charges were invoiced to pay punitive damages in the amount of $25 per member, to be individually recovered.

Persons entitled to such damages are described hereinafter as being members of the second sub-group or the third sub-group when both collective and individual recovery apply to a single bank. [ 34 ] The various condemnations are summarized as follows: Bank of Montreal (BMO) : First sub-group: through collective recovery, conversion charges invoiced between April 17, 2000, and December 31 2007, for a total of $27,086,737; Second sub-group: $25 in punitive damages to each member who can demonstrate that conversion charges were invoiced to their account between April 17, 2000, and September 1, 2002; Citibank Canada (Citibank) : First sub-group: through collective recovery, the charges invoiced between April 17, 2000, and December 31, 2007, for a total of $5,103,227; Second sub-group: $25 in punitive damages to each member who can demonstrate that conversion charges were invoiced to their account between April 17, 2000, and April 1, 2001; Toronto-Dominion Bank (TD) : First sub-group: through individual recovery, the conversion charges invoiced between April 17, 2000, and December 31, 2007; Second sub-group: $25 in punitive damages to each member who can demonstrate that conversion charges were invoiced to their account between April 17, 2000, and September 1, 2001; Canadian Imperial Bank of Commerce (CIBC) : First sub-group: through collective recovery, the charges invoiced between January 1, 2005, and December 31, 2007, for a total of $38,349,506; Second sub-group: through individual recovery, the charges invoiced between April 17, 2000, and December 31, 2004; Amex Bank of Canada (Amex) : First sub-group: through collective recovery, the charges invoiced between January 1, 2003, and December 31, 2007, for a total of $8,075,300; Second sub-group: through individual recovery, the charges invoiced between April 17, 2000, and December 31, 2002; Third sub-group: $25 in punitive damages for each member who can demonstrate that conversion charges were invoiced between April 17, 2000, and February 1, 2003; Laurentian Bank of Canada (LBC) : First sub-group: through collective recovery, charges invoiced between January 1, 2004, and December 31, 2007, for a total of $3,038,853; Second sub-group: through individual recovery, the charges invoiced between April 17, 2000 and December 31, 2003; National Bank of Canada (BNC) : First sub-group: through collective recovery, the charges invoiced between April 17, 2000, and December 31, 2007, for a total of $33,764,531; Second sub-group: $25 in punitive damages for each member who can demonstrate that conversion charges were invoiced to their account between April 17, 2000, and January 1, 2003;

Scotiabank (Scotia) : First sub-group: through collective recovery, the charges invoiced between January 1, 2004, and December 31, 2007, for a total of $4,055,630; Second sub-group: through individual recovery, the charges invoiced between April 17, 2000, and December 31, 2003; Royal Bank of Canada (RBC) : First sub-group: through collective recovery, the charges invoiced between November 1, 2003, and December 31, 2007, for a total of $36,261,380; Second sub-group: through individual recovery, the charges invoiced between April 17, 2000, and December 31, 2003.

GROUNDS OF APPEAL [ 35 ] The appellants' grounds can be put into four categories. [ 36 ] The first category is based on procedural law. A class action may be authorized and continued only against a bank with which the representative has a contractual relationship. Since Marcotte had a card issued by the BMO and Laparé had one issued by Amex, only these two banks could be lawfully sued; consequently, the impugned judgment is void because there is an absence of legal interest with respect to the seven other banks.

Furthermore, the judge erred in his description of the groups and in ordering collective recovery instead of strictly individual recovery. [ 37 ] The second category is two-pronged and based on a constitutional argument. First, the banks argue that their activities relating to credit cards fall under the exclusive jurisdiction of Parliament.

Also, though a province may legislate, the fact remains that banks are subject to comprehensive federal regulations, which are inconsistent with the supplemental application of the CPA , which then becomes ineffective as against them. [ 38 ] The third category of grounds, incidental to the second, is based on the

interpretation of the CPA . According to the appellants, the trial judge erred in his finding that the conversion charges were credit charges within the meaning of sections 68 et seq. of the CPA . Moreover, if they are in fact credit charges , the appropriate remedy is set out in

section 271 CPA , whereby any benefit received may be taken into account and, in this case, justify the conclusion that there was no prejudice whatsoever. By applying

section 272 CPA instead, the judge deprived them of this argument and allowed the members of the group to unjustly enrich themselves. Also, he erred in his application of the principles for awarding punitive damages with respect to the five banks that failed to disclose the existence of the conversion charges. [ 39 ] The fourth and last category groups together various civil law arguments: waiver, prescription, and exception to the principle of restitution. ANALYSIS I. Sufficient legal interest to act [ 40 ] Admittedly, a controversy on this matter has emerged from this Court's case law.

In support of their position, the appellants raise Agropur , supra , rendered at the authorization stage, and Option Consommateurs v. Novopharm Ltd. , [2008] R.J.Q. 1350, 2008 QCCA 949 . The respondents answer by citing CHSLD Christ-Roi , supra , rendered in a context identical to the case before us, and the judgment refusing leave to appeal in General Motors Canada ltd. v.

Billette , [2010] R.J.Q. 66, 2009 QCCA 2476 (leave to appeal to S.C.C. refused, 33582 (April 22, 2010)). [ 41 ] This controversy is not unique to Quebec since it is also ongoing in this country's common law jurisdictions and elsewhere in the Anglo-Saxon world (Vince Morabito, Standing to Sue and Multiple Defendant Class Actions in Australia, Canada, and the United States , (2003) 41 Alberta Law Review 295; [4] Rachael Mulheron, The Class Action in Common Law Legal Systems: A Comparative Perspective , (Portland: Hart Publishing, 2004) at 144–164).

Mulheron writes, on page 164, that it is " the most vexed, issues among the class action regimes of the focus jurisdictions”. [ 42 ] It is in light of the wording of the specific provisions of each jurisdiction that courts must determine the legislative intent on the issue, while bearing in mind that such intent is not necessarily uniform across the globe.

Before analyzing the relevant provisions in Quebec, it might be useful to attempt to define the schemes in other jurisdictions since they are sometimes cited before this Court. [ 43 ] In the United States, there is a legislative framework for class actions at both the state and federal court levels. At the American federal level, rule 23(

a) of the Federal Rules of Civil Procedure states four prerequisites for a class action to be certified, one of which is that "the claims or defenses [5] of the representative parties are typical of the claims or defenses of the class" [Emphasis added]. This "typicality" criterion has been interpreted as meaning that the representative must be in the same situation as each of the members of the group. It is closely connected to determining the common issue ("communality"). In the leading case of La Mar v.

H & B Novelty & Loan Company , 489 F.2d 461 (9th Cir. 1973), cited in paragraph 110 of Agropur , the Ninth Circuit Federal Court of Appeal relied on this criterion to refuse an action against several defendants when the representative could not justify a cause of action against each and every one of them, stating, on page 466:

Assuming, therefore that in this type of class action the role of the representative party is largely formal, it is reasonable in our view todesign its formal characteristics in a manner that is consistent with what we perceive to be the tone of the Advisory Committee's Note.

Inkeeping with that tone and to reduce the incidence of proceedings in which the trial judge and the representative plaintiff's counselbecome a part-time regulatory agency, we assert that a plaintiff who has no cause of action against the defendant cannot "fairly andadequately protect the interests" of those who do have such causes of action.

This is true even though the plaintiff may have suffered anidentical injury at the hands of a party other than the defendant and even though his attorney is excellent in every material respect. [Emphasis added.] [44] This same judgment, also on page 466, states that this does not prevent an action against several defendants in the followingsituations: Obviously this position does not embrace situations in which all injuries are the result of a conspiracy or concerted schemes between thedefendants at whose hands the class suffered injury.

Nor is it intended to apply in instances in which all defendants are juridically relatedin a manner that suggests a single resolution of the dispute would be expeditious. [45] The first situation boils down to recognizing that joint tortfeasors may be sued together; this is universally acknowledged. Thesecond, "juridically related", also referred to as the "juridical link doctrine", has yielded various

interpretations. It is applied, inter alia, tosoften or clarify what is required by the common situation by allowing lawsuits by several representatives against several defendants,even if each representative does not have a cause of action against each of the defendants, so long as the claims "arise from the sameevent or practice or course of conduct that gives rise to the claims of other class members" (Keele v.

Wexler, 149 F. 3d 589 at 594, ajudgment rendered in 1998 by the Federal Court of Appeal, Seventh Circuit). [46] I point out in passing that the "typicality" criterion does not exist in Quebec (Pierre-Claude Lafond, Le recours collectif, le rôledu juge et sa conception de la justice : impact et évolution (Cowansville, Que.: Yvon Blais, 2006) at 101; Guilbert v.

Vacances SansFrontière Ltd. (QC CA), [1991] R.D.J. 513 (C.A.), LeBel J.A. for the Court, at 516). [47] In Ontario, while the criteria for certification (which occurs after the class action has been brought) set out in the ClassProceedings Act, S.O. 1992, c. 6 (CPAO) are quite similar to those set out in the Code of Civil Procedure for authorization (which occursbefore the class action is brought), they do differ on one significant aspect. Indeed, Ontario law applies the additional criterion of"preferability", which requires that the timeliness of the class action whose certification is sought be considered.

That criterion is notrelevant to the present case. [48] However, under

section 21.01(1)(

b) of the Rules of Civil Procedure, R.R.O. 1990, Regulation 194, a plaintiff’s standing withrespect to a defendant may be contested before a class action is certified: 21.01

(1) Une

partie peut demander à un juge,par voie de motion : (

a) soit, qu’une question de droit soulevée par unacte de procédure dans une action soit décidéeavant l’instruction, si la décision de la questionest susceptible de régler la totalité ou une partiede l’action, d’abréger considérablementl’instruction ou de réduire considérablement lesdépens;

b) soit, qu’un acte de procédure soit radié parcequ’il ne révèle aucune cause d’action ou dedéfense fondée. Le juge peut rendre une ordonnance ou unjugement en conséquence. [Emphasis added.] 21.01

(1) A party may move before a judge, (

a) for the determination, before trial, of aquestion of law raised by a pleading in an actionwhere the determination of the question maydispose of all or part of the action, substantiallyshorten the trial or result in a substantial savingof costs; or (

b) to strike out a pleading on the ground that itdiscloses no reasonable cause of action ordefence, and the judge may make an order or grantjudgment accordingly. [49] Therefore, if there are several defendants that are sued, those from whom the plaintiff (who does not yet have the status ofrepresentative) cannot hope to receive compensation may argue that the plaintiff has no cause of action against them. [50] After some initial hesitation, the Ontario courts decided that there must be a representative who can claim from each of thedefendants. It is therefore possible to sue several companies in a single action by alleging a similar fault as long as there is a

representative with a relationship with each defendant. The situation is thereby similar to the practice established before the Americanfederal courts. [51] The judgment rendered by the Ontario Superior Court of Justice in Ragoonanan Estate v. Imperial Tobacco Canada Ltd.(2000), (ON SC), 51 O.R. (3d) 603, marked a turn (it is cited in Option consommateurs v. Novopharm Ltd.).Cumming J. writes therein: [52] Looked at in the context of the motion for certification, there is arguably not a prerequisite required by s. 5(1)(

a) to have arepresentative plaintiff with a cause of action against each defendant. For the purposes of certification, it may be enough if the pleadingprovides that class members have a cause of action against the defendants and there is at least one representative plaintiff. Campbell andHarrington both dealt with a motion for certification. They did not deal with a pre-certification motion under B.C. rule 19(24) [SupremeCourt Rules, B.C. Reg. 221/90] being the equivalent to rule 21.01(1)(

b) in Ontario. As well, it is clear that in both Campbell andHarrington, for each defendant there were known putative class members with a cause of action against the defendant. This was notdisputed by the defendants. [53] It is not necessary to offer any definitive

interpretation for s. 5(1)(

a) of the CPA in the context of the Rule 21 motion at hand. As Ihave said, it is recognized that the requirements of Rule 21 and the procedural regime for class proceedings determined by the provisionsof the CPA should be consistent one with the other. [54] In my view, and I so find, it is not sufficient in a class proceeding, for the purpose of meeting the requirement of rule 21.01(1)(b), ifthe pleading simply discloses a “reasonable cause of action” by the representative plaintiff against only one defendant and then putsforward a similar claim by a speculative group of putative class members against the other defendants. [55] At the earlier point in time of the rule 21.01(1)(

b) motion, the representative plaintiff is the only plaintiff party to the pleading. Theputative class members cannot be considered parties until certification is granted by the court. In addition, in the case at hand therecannot be any certainty that there are any persons with a cause of action against RBH and JTI-M. There cannot be a cause of actionagainst a defendant without a plaintiff who has that cause of action.

In my view, for every named defendant there must be a partyplaintiff with a cause of action against that defendant to meet the Rule 21 threshold. [56] This result does not inhibit class proceedings with multiple defendants when there is a generic product (or generic defect) in issue,so long as the pleading discloses a reasonable cause of action against each defendant by a representative plaintiff. The rule 21.01(1)(b)motion of course precedes any certification motion. The determination of this rule 21.01(1)(

b) motion is without prejudice to arepresentative plaintiff with a cause of action against RBH/JTI-M bringing a new class proceeding and seeking an order for joinder withthe action at hand. Until there is a plaintiff who has such a cause of action, it is entirely speculative as to whether there is anyone withsuch a claim. A defendant should not be made subject to a speculative claim which presumes that one or more unknown persons possiblyhas a cause of action.

It would be wrong to put a defendant to the expense of the litigation process if there is no reasonable cause ofaction against that defendant on the face of the pleading. [Emphasis added.] [52] In other words, there must be a cause of action between the representative(

s) and each of the defendants (it should be pointedout that in Ragoonanan Estate, there was no evidence that there were potential members with respect to the other defendants). Thisapproach was confirmed by the Court of Appeal for Ontario in Hughes v.

Sunbeam Corp. (Canada) Ltd. (2002), (ONCA), 61 O.R. (3d) 433. [53] The Ontario approach has been rejected in the other common law provinces of this country, however, even those that adoptedstatutes inspired by Ontario's, where an absence of cause of action may be raised prior to certification. [54] First, in British Columbia, where a legislative framework for class actions has existed since 1996: Class Proceedings Act,R.S.B.C. 1996, c. 50. In MacKinnon v.

National Money Mart Co., [2005] 1 W.W.R. 233, 2004 BCCA 472, a five-judge panel, sitting onappeal from an interlocutory judgment dismissing the motions to dismiss brought prior to certification by several of the defendants suedby a representative who had not borrowed from all but only from three of them, was asked to adopt the American position or at the veryleast that espoused in Ontario since the Ragoonanan Estate judgment.

After analyzing the British Columbian statute, which is similar tothe Quebec provisions in many respects, the Court of Appeal dismissed the appellants' arguments, also very similar to those presentedbefore us in this case: [51] I conclude that while the Act requires a cause of action against each named defendant, that cause of action must be held by classmembers, not necessarily the representative plaintiff. [52] The appellants urge upon us the reasoning in Ragoonanan.

However, that case concerns a different statute, one without theequivalent of s. 2(4).[6] It may be distinguished simply on that basis. [53] The appellants complain that they will be dragged into expensive proceedings without a prospect of recovering costs, referring tos. 37 of the Act. However, that risk flows from the language in the statute and, in any event, is not absolute. The possible sanction ofcosts exists, particularly under s. 37(c).

Further, there is the potential to flush out a representative plaintiff with a cause of action against adefendant, or an identifiable class member, through the process of establishing subclasses, through the s. 4 certification application andthrough the discovery process. [54] The appellants also express concern that an entire business sector may be embroiled in litigation at the instance of one person incircumstances where there is no real complaint against many of the defendants. On the other side of this, of course, is the concerndiscussed in Lupsor Estate v. Middlesex Mutual Insurance Co., [2003] O.J.

No. 1038 (S.C.J.) of needless multiple proceedings. Thematerialization of unfocussed, sector-wide litigation would be a concerning development. However, tools for corralling abuse existwithin the Act, both in the certification process that tests the commonality of issues and imports the test of fairness and efficiency, andafter certification if such should be ordered. This will be particularly important where, as here, the claim hinges on an allegation of

criminal conduct. [55] I would expect the controls given to the trial court by the Act to be applied robustly, so as to protect against abuse while stilladvancing the three objectives I referred to at the beginning of these reasons for judgment. [56] The appellants also commend to us the principle of consistency between jurisdictions to prevent forum shopping, referring toAmchem Products Inc. v. British Columbia (Workers' Compensation Board), (SCC), [1993] 1 S.C.R. 897, 102 D.L.R.(4th) 96. I agree it is better, all things being equal, that like statutes in different jurisdictions bear like results.

However, as I have soughtto explain in these reasons for judgment, I do not consider the Act to correspond to the Ontario statute in a critical aspect bearing on theissue before this Court. [Emphasis added.] [55] In Alberta, class actions have had a statutory framework since only 2003: Class Proceedings Act, S.A. 2003, c. C-16.5. Aftersome hesitation and contradictory judgments, case law finally opted to follow British Columbia's approach and reject the Ontarioapproach: Pauli v. Ace Ina Insurance, 322 A.R. 104, 2002 ABQB 715; Gillespie v. Gessert (2006), 32 C.P.C. (6th) 319 (Alta.

Q.B.);Condominium Plan No. 0020701 v. Investplan Properties Inc., 57 Alta. L.R. (4th) 310, 2006 ABQB 224; Alberta Society for PensionReform v. Alberta, 2008 ABQB 74, 450 A.R. 191; Eaton v. HMS Financial Inc., 458 A.R. 282, 2008 ABQB 631. [56] The sole reported Manitoba judgment on this issue also chose British Columbia’s approach: Bellan v. Curtis, 219 Man.R. (2d)175, 2007 MBQB 221, rendered pursuant to the Class Proceedings Act, C.C.S.M., c. 130. [57] In Saskatchewan, where there has been legislation in place since 2001 (Class Proceedings Act, S.S. 2001, c.

C-12.01), thetheory presented in this case by the appellants has been consistently rejected, as indicated recently by Richards J.A. on behalf of theCourt of Appeal in Red Seal Vacations Inc. v. Alves, [2012] 1 W.W.R. 701, 2011 SKCA 117: [3] This set of circumstances led Red Seal to bring a motion pursuant to Rule 173(

a) of The Queen’s Bench Rules. The motion askedthat the claim in relation to Red Seal be struck as disclosing no cause of action because there was no party plaintiff asserting a claimagainst it. The certification judge refused the motion by relying on Frey v. BCE Inc., 2006 SKQB 328, [2006] 12 W.W.R. 545 and Freyv. BCE Inc., 2006 SKQB 331, 282 Sask. R. 35.

In those cases, Justice Gerein had said only one representative plaintiff is required inclass action proceedings, regardless of whether there are defendants against whom no named plaintiff asserts a cause of action. [4] Red Seal appeals the decision of the certification judge and asks us to overturn it on the basis that, unless there is a party plaintiffmaking a claim against it, the action must be dismissed. [5] For the reasons set out below, I conclude this appeal must be dismissed. One defendant in a multi-defendant action commencedunder the Act cannot have the claim struck pursuant to Rule 173(

a) for failing to disclose a cause of action simply and only because thereis no party plaintiff alleging a claim against that defendant. In light of the nature of proceedings under the Act, it is sufficient that arepresentative plaintiff asserts a cause of action on behalf of a class of persons whose putative members are alleged to have a claimagainst the defendant. … [28] In my view, the central difficulty with Red Seal’s argument is its contention that the proceeding commenced by Ms.

Alves et al isan ordinary action—no different than any other—and that a clear line should be drawn between the “pre-certification” and “certification”stages of this kind of litigation. This approach overlooks the central nature of the Act and the procedures it contemplates. … [33]

Section 44 of the Act does say The Queen’s Bench Rules apply to class actions. However, it also sets out an important qualificationin this regard. The Rules apply only to the extent that they are not in conflict with the Act.

Section 44 reads as follows: 44 The Queen’s Bench Rules apply to class actions to the extent that those rules are not in conflict with this Act. [34] I note, as well, that Rule 77 of The Queen’s Bench Rules provides that “[u]nless provided otherwise by the [Act] or by the rules inthis Division, the general procedure and practice of the court shall apply to actions and applications brought under the [Act].” But, thisdoes not mean that, in the application of the Rules, a judge can or should turn a blind eye to the special nature of an action commencedunder the Act. [35] In the result, it is clear that Rule 173(

a) must be applied here in a way which recognizes and is sensitive to the scheme of the Actand the class proceeding dimension of an action brought pursuant to the Act. [36] When Red Seal’s motion is considered in this way, it becomes apparent that it cannot succeed. The Act does not demand, as a pre-condition of certification, that for every defendant there be a party plaintiff with a cause of action against that defendant.

Rather, s. 4(1)says a resident of Saskatchewan who is a member of a class may commence an action “on behalf of ” the members of the class. [39] Having considered s. 4(1) of the Act what then of the certification proceedings proper? This aspect of the matter is also fairlystraightforward.

Once a claim is initiated pursuant to s. 4(1) and a certification application is made, the court determines theappropriateness of the matter proceeding as a class action by reference to the criteria set out in s. 6(1) of the Act 6(1) Subject to subsections (2) and (3), the court shall certify an action as a class action on an application pursuant to

section 4 or 5 if thecourt is satisfied that: (

a) the pleadings disclose a cause of action;

(

b) there is an identifiable class; (

c) the claims of the class members raise common issues, whether or not the common issues predominate over other issues affecting individual members; (

d) a class action would be the preferable procedure for the resolution of the common issues; and (

e) there is a person willing to be appointed as a representative plaintiff who: (

i) would fairly and adequately represent the interests of the class; (ii) has produced a plan for the class action that sets out a workable method of advancing the action on behalf of the class and of notifying class members of the action; and (iii) does not have, on the common issues, an interest that is in conflict with the interests of other class members. [40] No aspect of s. 6(1) categorically forecloses the possibility of a multi-defendant class action being certified if there is not a party plaintiff with a cause of action against each defendant . Indeed, in Ragoonanan Estate v.

Imperial Tobacco Canada Ltd. itself, Cumming J., without being definitive, acknowledged the flexibility of the certification process on this point when he wrote as follows: [52] Looked at in the context of the motion for certification, there is arguably not a prerequisite required by s. 5(1) (

a) to have a representative plaintiff with a cause of action against each defendant. For the purposes of certification, it may be enough if the pleading provides that class members have a cause of action against the defendants and there is at least one representative plaintiff. … (emphasis added) [41] The prospect of a representative plaintiff acting against a defendant in the absence of a direct cause of action between them is expressly reflected in s. 4(4) of the Act.

It says a person who is not a member of the class may be named as a representative plaintiff in order to “avoid a substantial injustice to the class.” This too suggests it is not an essential feature of a class action that a representative plaintiff or plaintiffs have a cause of action against each defendant . See: MacKinnon v. National Money Mart Co. , supra , at paras. 49 and 50 . [42] All of this accords with the views of the courts in British Columbia.

As noted above, they have taken the position that, for purposes of certification, it may not always be necessary to have a representative plaintiff with a cause of action against each of several defendants. See: Campbell v. Flexwatt Corp., supra at para. 43; Furlan v. Shell Oil Co., supra at para. 22; and Harrington v. Dow Corning Corp., supra at para. 51 (B.C. S.C.). [43] In my opinion, this is the correct approach and it dictates the result of the Rule 173(

a) application in issue here. An action commenced pursuant to the Act. must be seen as being connected to, and flowing directly into, the certification application. It is different than an ordinary action in this critical way. Under the certification process, an application to proceed against a defendant in a multi- defendant proceeding is not automatically doomed to fail because there is no party plaintiff with a cause of action against that defendant . This necessarily means the Rule 173(

a) application in issue here cannot succeed, i.e. it is not “plain and obvious” that a claim cannot be certified against Red Seal simply because the statement of claim does not include a named plaintiff with a cause of action against it. [Emphasis added.] See to the same effect: Microcell Communications Inc. v. Frey , [2012] 3 W.W.R. 423, 2011 SKCA 136 (leave to appeal refused with costs before the Supreme Court (S.C.C., 28 June 2012, No. 34618). [ 58 ] I will now consider the situation in Quebec, where the class action was introduced in 1978 through the Act Respecting the Class Action , R.S.Q., c.

R-2.1, which added Book IX to the Code of Civil Procedure . The new provisions are thereby incorporated into an existing code whose other provisions apply to class actions, but only insofar as they are not inconsistent with the provisions of Book IX; 1051. Les dispositions des autres livres du présent code incompatibles avec le présent Livre, notamment le deuxième alinéa de l'article 172 et les articles 270 à 272 et 382 à 394, ne s'appliquent pas aux demandes pour les fins desquelles on exerce le recours collectif. 1051.

The provisions of the other books of this Code that are inconsistent with this Book, particularly the second paragraph of

article 172 and articles 270 to 272 and 382 to 394, do not apply to suits for the purposes of which the class action is brought. [ 59 ] This means that, in the present case,

article 55 C.C.P ., which the seven appellants have raised, applies here but in such a way as to respect the spirit of Book IX. This is the legislative intent. [ 60 ] Admittedly,

article 55 C.C.P. is of public order and, in an ordinary action, absence of interest could be raised at any time by a defendant through an exception. In the absence of a statutory exception, interest must be direct and personal to be sufficient ( Jeunes canadiens pour une civilisation chrétienne v. Fondation du Théâtre du Nouveau-Monde , [1979] C.A. 491 ; Noël v.

Société d’énergie de la Baie James , [2001] 2 S.C.R. 207, 2001 SCC 39 ). [ 61 ] This interest may result from a contractual relationship between the plaintiff and the named defendant or from an extra- contractual breach by the named person against the plaintiff. This does not mean, however, that the plaintiff must always be the one with the standing (the victim of a fault who sues the wrongdoer, for example). Indeed, Quebec law acknowledges that some people may sue

on behalf of an interested person (e.g., the tutor of a minor (article 159 C.C.Q. ), the ad hoc tutor (article 190 C.C.Q. ) or the mandatary designated by mandate in anticipation of incapacity (article 2166 C.C.Q. )). [7] This acknowledgement of a person's capacity to act on behalf of others arises from explicit statutory authorization (e.g., parents' tutorship of their minor, unemancipated children,

article 192 C.C.Q. ), from appointment (e.g.,

article 200 C.C.Q. ), or from a judgment (article 205 C.C.Q. ). This is why

article 55 C.C.P. states that there must be "sufficient interest", not a personal legal interest. As the Court points out in Agropur , supra , in paragraph 103, cause of action must be distinguished from standing. [ 62 ] When a proceeding is brought on behalf of another person, its validity is a function of the quality of the representative and the legal interest of the represented; a defendant may therefore raise two exceptions, one respecting the representative's want of standing (article 165 (2) C.C.P. ) and the other respecting the represented's want of legal interest (article 165 (3) C.C.P. ). [ 63 ] In Quebec, preliminary exceptions are not encouraged at the authorization stage and

article 1012 C.C.P. urges instead that litigants raise them in the course of the class action, once it has been authorized and brought. In fact, only preliminary exceptions raising issues distinct from the criteria set out in

article 1003 C.C.P .—such as lis pendens , absence of rationae materiae jurisdiction, and res judicata —seem to be allowed prior to authorization. As for the want of sufficient standing to represent all of the members of the proposed group, this issue is part of the analysis required under

article 1003 since it can be assessed only on the basis of the questions submitted, the group the representative wishes to represent, the representative's capacity to assert the interests of all the members of the group, and so on. [ 64 ] In the case of a motion for authorization to institute a class action against a sole defendant, the absence of a legal relationship between the petitioner and the defendant would clearly justify a judge’s refusal to ascribe the status of representative to the petitioner (article 1003 C.C.P. ). The bringing of class actions by persons whose only actual interest is to act on behalf of a group of which they are not a

part is thus curtailed. As illustrated in Agropur , our system does not take kindly to righters of wrongs or professional litigants seeking fame or fees, without seeking personal remedy. [ 65 ] It should be noted, however, that in certain situations the specific rules in the book on class actions set aside this principle. [ 66 ] Thus,

article 1048 C.C.P. authorizes certain corporate bodies and associations to act as representatives so long as one of their members, identified in the motion, is a member of the proposed group and holds an interest, which must be connected to their mission, as against the defendant. The obligation to identify a natural person with a legal connection to the defendant prevents class actions from being brought by corporate bodies alone or by associations that act as professional litigants. That being said, the fact remains that

article 1048 C.C.P. acknowledges that a class action may be brought and led by an entity that does not have a direct and personal interest against the defendant, within the meaning of

article 55 C.C.P . [ 67 ] Similarly, if the individual representative loses his or her direct and personal interest against the defendant at trial by accepting the latter's settlement offer, that representative may nevertheless continue to act since he or she is "deemed to have a sufficient interest" (article 1015 C.C.P. ). [8] [ 68 ] These provisions confirm two things: (

i) that the quality of the representative and the interest of the represented are two distinct concepts; (ii) that it is possible for a representative not to have a direct and personal interest in the class action. [ 69 ] Based on this same logic, this Court has refused to dismiss a class action on the ground that the representative's individual action was prescribed, since the actions of most of the members of the group were not: Service aux marchands détaillants ltée (Household Finance) v.

Option Consommateurs , J.E. 2006-2099, 2006 QCCA 1319 . [9] [ 70 ] As previously noted, not only do the provisions of the Code of Civil Procedure respecting class actions distinguish between the quality to act as representative and the interest in obtaining a condemnation against a defendant (articles 1015 and 1048 C.C.P. ), but they do not exclude the possibility of multiple defendants.

Furthermore, they allow for members to intervene to support the representative's situation (article 1017 C.C.P. ) and to be examined, if need be (article 1019 C.C.P. ), which may be useful when there are several defendants and as many possible sub-groups. [ 71 ] It is also noteworthy that, under the provisions of Book IX, a class action exists only once it has been authorized. [10] The petitioner, as "representative", will bring a class action on behalf of the members of the group only if authorization to do so is granted (article 1011 C.C.P. ).

When several defendants have been named in the action, those defendants who have a direct relationship with the representative cannot argue that the said representative has no interest with respect to those parts of the action that concern them personally.

As for the other defendants, once a person has been ascribed the status of representative, they cannot argue that person’s want of sufficient standing with respect to the part of the action brought on behalf of the other members of the group or argue that they are a party to an action that does not concern them, since the authorization stage has established that there are legal relationships between members of a sub-group and each of them, and these members will be the only ones to obtain a condemnation against that particular defendant.

Essentially, so long as there is a real sub-group of members, defendants cannot argue that there is no cause of action against them or that the authorized representative has insufficient standing to assert this cause of action. [ 72 ] Finally, the Supreme Court in Marcotte v. Longueuil (City of) [2009] 3 S.C.R. 65, 2009 SCC 43 , teaches that, when analyzing the authorization criteria set out in

article 1003 C.C.P. , trial judges can draw inspiration from Agropur , a leading case. The Supreme Court adds that the judge must keep in mind

article 4.2 C.C.P. regarding proportionality and points out that the legal system is a public service with limited resources. Without necessarily making it a fifth criterion ( Apple Canada Inc. v. St-Germain , [2010] R.J.Q. 1627, 2010 QCCA 1376 ),

article 4.2 C.C.P. must be taken into consideration when analyzing the four criteria set out under

article 1003 C.P.P. and when making the determinations listed in

article 1005 C.P.P. (Jean-Philippe Lincourt & Jean Saint-Onge,

La définition du groupe : pierre angulaire du recours collectif, Développements récents en recours collectifs , vol. 295, (Cowansville, Que.: Yvon Blais, 2008) at 155). [ 73 ] Yet, in CHSLD Christ Roi , supra , to adopt the position proposed by the appellants would have resulted in dozens of representatives being required, each acting separately on behalf of the residents living in each of these institutions. In other words, it would have been necessary to authorize dozens of class actions that were identical except as to the identity of the defendant, and that

concerned the same issue (interpreting a provincial regulation) and sought a single remedy (the reimbursement of overcharged amounts). These dozens of similar class actions would then need to be managed.

Once the files were readied for trial, it would have been necessary to assign them all to a single judge to avoid contradictory judgments or to proceed in one of the files while the others were stayed (it is easy to imagine that counsel for each of the other defendants would then have sought to intervene in the lead case). [ 74 ] Such an approach was clearly rejected by the Court in CHSLD Christ Roi , supra : [ translation ] [31] The presence of multiple defendants in this case does not require that there be as many representatives as there are CHSLDs.

Indeed, the issue in dispute is common to all the establishments, be they private under agreement or public, that do not offer their users the laundry services to which they argue they are entitled under the Act . To proceed as the appellants suggest would result in as many class actions as there are establishments, which would entail significant, maybe even very significant, fees and procedural complexity that would require more resources from the legal system than are required.

To impose on the users of long-term treatment facilities the obligation to bring as many class actions as there are establishments would dissuade them from asserting their rights before the courts, which would be contrary to the objectives of class action lawsuits.

To accept the public establishments' proposal would, in a case such as this one, stifle the class action lawsuit and undermine its social objective. [ 75 ] By accepting this interpretive approach, I find that the Code of Civil Procedure provisions respecting interest and cause of action are applied to class actions to the extent of their relevance ( Marcotte v. Longueuil (City of) , supra , para. 21) 21), taking into consideration the nature of these actions, while providing a clear framework for bringing them before the courts ( Marcotte v. Longueuil (City of) , supra , at para. 22).

In other words, they are applied in accordance with legislative intent. [ 76 ] To those who fear unmanageable or unfounded lawsuits, I would reiterate that when judges are presented with a motion for authorization to institute a class action against several defendants, they must ensure that the petitioner is able to adequately represent all the members of the group (article 1003(

d) C.C.P. ). This justifies confirming a representative's degree of knowledge of the situation of the persons he or she intends to represent, especially as it relates to the defendants against whom he or she does not have a personal claim. This is in order to avoid fishing expeditions, among other things. The class action is not intended to be an investigation into a commercial or industrial sector of activity. [ 77 ] The petitioner must also demonstrate that even if he or she does not have a personal cause of action against some of the defendants, should the action be allowed on the merits, there are a sufficient number of persons in the proposed group who do (article 1003(

c) C.C.P. ). The judge must also ensure that there are identical, similar, or related questions of law or fact with respect to all the defendants (article 1003(

a) C.C.P. ). [ 78 ] In his or her analysis, the judge will have to question the appropriateness of describing a group that is in truth made up of several sub-groups (article 1005 C.C.P. ), ensuring that this group is not pointlessly large, without necessarily requiring that the members share exactly the same interest in seeing the common question answered. He or she will also take into account the complexity that this could add to the file, the possible delays, the terms for recovery and liquidation of the claims if the action were to be allowed on the merits, and so on, in accordance with

article 4.2 C.C.P . (Éric McDevitt David, La règle de proportionnalité de l'art. 4.2 C.p.c. en matière de recours collectif , in Service de la formation continue, Barreau du Québec, Développements récents en recours collectifs, vol. 278 (Cowansville, Que.: Yvon Blais, 2007) at 315. [ 79 ] In the present case, the class action was authorized and the legal status of representative was ascribed to Marcotte. This was absolutely justified considering that all the members of the group had a common dispute that was similar in nature and that resulted from the same legislative provisions and the same banking practices.

From that moment, the status of representative could be ascribed to Marcotte with respect to all nine banks without fear that he would be unable to properly understand the situation of each of the members of the sub-groups or to adequately defend their interests independent of the card they held or the bank that issued the said card.

Once Marcotte was ascribed the status of representative, he, as the representative of the clients of the seven other banks, had sufficient standing to bring the class action. [ 80 ] The seven appellant banks' exception, since it was raised at trial, actually impugned the representative's status, not the claim that the members of the seven sub-groups had a cause of action against each of them.

Absent new determinative facts, Gascon J. was right to dismiss this attack based on CHSLD Christ Roi , supra , in which the Court wrote: [ translation ] [24] We must recall that, in this case, the authorizing judge considered that the criteria of 1003 C.C.P. had been met, including that set out in 1003(

d) respecting the representative's capacity to adequately represent the members of the group. The authorizing judge, the Honourable Mr. Justice André Desmeules of the Superior Court in that case, explained his decision to ascribe the status of representative to Michel Cantin this way; [ translation ] Finally, paragraph (

d) of the same

article requires that the member to whom the Court intends to ascribe the status of representative must be able to ensure the adequate representation of the members. In the present case, one of the petitioners is the Comité provincial des malades, whose objectives include representing beneficiary committees or any other organization that represents the residents of any long-term care hospital or housing complex for adults. As for petitioner Michel Cantin, he is both Mr. Henri Cantin's son and his mandatary, pursuant to a mandate in the event of incapacity.

He further acts as a representative of the Comité provincial des malades. In support of their motion, the petitioners filed a list of the known members as at October 3, 1997, and the petitioner Michel Cantin was

examined on affidavit by counsel for the respondents. After taking notice of the examinations, the Court finds that Michel Cantin is able to ensure the adequate representation of the members of the group that he wishes to represent. [25] This judgment is res judicata respecting the fact that the representative has sufficient standing to act on behalf of all the members of the group, regardless of the establishment in which they are housed.

Absent new determinative facts, the trial judge was right to dismiss this ground of contestation. ... [Emphasis added.] * * * * * [ 81 ] In conclusion, once the stages of the class action, the objectives of the Code of Civil Procedure provisions on the authorization and conduct of the class action, and the recent teachings of the Supreme Court and other appellate courts of this country on class actions are well understood, in all cases where several defendants are sued in a single action, it is not necessary in Quebec for the representative to justify a personal cause of action against each of them.

A flexible approach must therefore be adopted when applying Agropur (Union des consommateurs and Myrna Raphaël v. Bell Canada , 2012 QCCA 1287 ). II. Applicability of the CPA [ 82 ] Banking institutions are authorized to issue credit cards to consumers (

section 409 of the Bank Act , S.C. 1991, c.46). [ 83 ] When a bank issues credit cards to its clients it is in fact entering into a variable credit agreement, thereby making it

an act that is at the very heart of a bank's activities. In some cases, such as with Amex, this may even be the bank's principle or exclusive activity. [ 84 ] Nevertheless, this type of granting of credit does not fall under the exclusive jurisdiction of Parliament under section 91(15) of the Constitution Act, 1867 (U.K.) , 30 & 31, Vict., c. 3, respecting banks. It is actually largely exercised by other financial institutions such as trust companies and credit unions, both federal and provincial, and even by non-financial institutions.

In Quebec, the main issuer of Visa credit cards seems, in fact, to be Desjardins. [ 85 ] As Gascon J. pointed out in his judgment, banks cannot claim to have invented credit cards. In fact, credit cards first appeared as charge cards issued by department stores and oil companies. Afterwards, travel and entertainment cards ("T & E cards"), which were accepted by many merchants, appeared.

It is only in a third phase that bank credit cards appeared because this activity was for them nothing more than [ translation ] "the product of a commercial opportunity that they seized upon with gusto, because of the strength of their network, its scope, and the reciprocity that characterizes their industry" (paragraph 673 of the trial judgment). [ 86 ] In short, it was a new way, expressly allowed by the Bank Act , for banks to issue credit to their clients and offer them ancillary services (means for foreign currency payments, access to tellers around the world for cash withdrawals, various insurance products, etc.).

This activity cannot be considered to be beyond the scope of provincial legislation, as the Supreme Court of Canada points out in Canadian Western Bank v. Alberta , [2007] 2 S.C.R. 3, 2007 SCC 22 , at paragraph 89 : [89] The appellants also then rely on this Court’s holding in Bank of Montreal v.

Hall in which it was held . . . il est incontestable que la compétence fédérale en matière d’opérations bancaires permet au Parlement d’établir une nouvelle forme de financement et de définir, d’une façon complète et exclusive, les droits et obligations des emprunteurs et des prêteurs en vertu de cette sûreté. [p. 150] However, it must be repeated that just because Parliament can create innovative forms for financing does not mean that s. 91(15) grants Parliament exclusive authority to regulate their promotion .

If provincial legislation were held to be inapplicable to all forms of security held as collateral by banks, then the application of provincial legislation such as the Personal Property Security Act , R.S.A. 2000, c. P-7 (“ PPSA ”), would also be in jeopardy. The appellants claim that the Insurance Act differs from the PPSA because the Insurance Act may lead to a prohibition of the activity (promoting insurance), whereas the PPSA deals only with how the creditor realizes on a security.

However, the Insurance Act does not prohibit the promotion of insurance any more than the PPSA prohibits realization on a security provision. In both cases, compliance with provincial rules is a pre-condition to obtaining the benefit of the statute.

The rigid demarcation sought by the banks between federal and provincial regulations would not only risk a legal vacuum, but deny to lawmakers at both levels of government the flexibility to carry out their respective responsibilities. [Emphasis added.] [ 87 ] The exclusivity argument submitted by counsel for the banks to set aside any application of the CPA is therefore without legal merit. III.

New federal framework [ 88 ] Let us now consider the second aspect of the argument respecting the constitutional inapplicability of the CPA , that of the inconsistency of the provisions of that statute with the federal framework for activities relating to cards issued by banks. [ 89 ] There is no question that Parliament can regulate banking activities, notably those respecting variable credit and credit cards.

There is no doubt either that in the event of conflict between federal regulations and provincial legislation, which also applies pursuant to separation of powers under sections 92(13) and (16) Constitution Act, 1867 , that the federal provisions will prevail following the paramountcy principle. [ 90 ] But there must nonetheless be a real conflict, as the Supreme Court points out in Canadian Western Bank :

[37] The “dominant tide” finds its principled underpinning in the concern that a court should favour, where possible, the ordinary operation of statutes enacted by both levels of government. In the absence of conflicting enactments of the other level of government, the Court should avoid blocking the application of measures which are taken to be enacted in furtherance of the public interest.

Professor Paul Weiler wrote over 30 years ago that the court should refuse to try to protect alleged, but as yet unoccupied, enclaves of governmental power against the intrusions of another representative legislature which has ventured into the area. Instead, the court should try to restrict itself to the lesser but still important role of interpreting statutes of different jurisdictions in the same area, in order to avoid conflict, and applying a doctrine of paramountcy in the few situations which are left. ... [ 91 ] Federal regulations can be found in three places: (

i) Bank Act ; (ii) Cost of Borrowing (Banks) Regulations , SOR/2001-101 ( Regulation ); and (iii) Financial Consumer Agency of Canada Act , S.C. 2001, c. 9 ( FCAC Act ). [ 92 ] The Bank Act gives various

definitions. At sections 449 and 451 to 454, it sets out obligations with respect to computing the cost of borrowing and disclosing it, as well as other charges, including non-interest charges . I point out that section 452(2) of the applicable version, obliges banks to disclose all the charges associated with credit card use:

(1) La banque qui consent à une personne physique un prêt visé à l’article 450 remboursable à date fixe ou en plusieurs versements doit lui faire savoir, conformément aux règlements : ...

(2) La banque qui délivre ou a délivré une carte de paiement, de crédit ou de débit à une personne physique doit lui communiquer, outre le coût d’emprunt en ce qui concerne tout emprunt obtenu par elle au moyen de cette carte , l’information suivante, conformément aux règlements :

a) les frais et pénalités visés à l’alinéa (1) b );

b) les droits et obligations de l’emprunteur;

c) les frais qui lui incombent pour l’acceptation ou l’utilisation de la carte ;

d) au moment et en la forme réglementaires, les changements — dont la nature est prévue par règlement — apportés au coût d’emprunt ou à l’accord relatif au prêt;

e) au moment et en la forme réglementaires, les autres renseignements prévus par règlement. 3. ... [Emphasis added.] 452.

(1) Where a bank makes a loan in respect of which the disclosure requirements of

section 450 are applicable and the loan is required to be repaid either on a fixed future date or by instalments, the bank shall disclose to the borrower, in accordance with the regulations, ...

(2) Where a bank issues or has issued a credit, payment or charge card to a natural person, the bank shall, in addition to disclosing the costs of borrowing in respect of any loan obtained through the use of the card , disclose to the person, in accordance with the regulations , (

a) any charges or penalties described in paragraph (1)(b); (

b) particulars of the person’s rights and obligations; (

c) any charges for which the person becomes responsible by accepting or using the card ; (

d) at such time and in such manner as may be prescribed, such changes respecting the cost of borrowing or the loan agreement as may be prescribed; and (

e) any other prescribed information, at such time and in such form and manner as may be prescribed. 3. ... [ 93 ] Since September 1, 2001, this statute has been supplemented by the Regulation , which governs, amongst other things, the disclosure of borrowing costs and non-interest charges (section 11), the computation of the borrowing cost with a specific mathematical formula (section 3), the charges included in or excluded from the borrowing cost (section 5), the moment when written statements must be made and the content they must include (sections 6, 7, 8, 9, 10, and 11), as well as the date from which the interest begins to accrue (section 12).

The Regulation also includes, in a schedule, information boxes that serve to succinctly guide disclosure of the information required, including conversion rates. [ 94 ] Since the coming into force of the FCAC Act , an agency has supervised banking institutions to "determine whether they are in compliance with the consumer provisions applicable to them" ( section 3(2) (

a) of the FCAC Act ). This agency's mission also includes promoting consumer awareness (section 3(2)(

d) FCAC Act ). It is further empowered to investigate (

section 5 of the FCAC Act ) and to impose a penalty (

section 22 FCAC Act ). A commissioner rules on complaints. [ 95 ] For its part, the CPA includes provisions respecting the obligation to disclose charges, the computation of credit charges and the credit rate , the nature of the information that must be given to cardholders, the grace period, the charges that can be claimed, and so on. It also provides that a provincial agency, the Office de la protection du consommateur (OPC), can hear complaints, investigate, and

commence penal proceedings when the provisions of the CPA are violated. [96] In short, since 2001, we have had two oversight systems with the same objective, to protect consumers by requiring that certaininformation be provided, stating the rules for computing the rates applicable to credit, outlining the manner in which charges and interestmay be claimed, supervising the operations of card issuers, and setting up mechanisms to address complaints by offering remedies, etc. [97] The overlaps between the federal scheme and the CPA are obvious and numerous.

This is not in itself unusual and is even muchless unconstitutional. We must delve deeper to determine whether there is harmony or, on the contrary, conflict between the twoschemes. [98] Scholarly commentary and case law acknowledge two types of conflict: operational and of intention. Operational conflicts relateto provisions adopted under federal jurisdiction on the one hand, and those adopted under provincial jurisdiction on the other, whichoblige the subject to do one thing as well as its polar opposite.

In other words, the subject is faced with the practical impossibility ofrespecting two series of provisions. Conflicts of intention appear in situations where, even if it is technically possible to respect both,applying the provincial provision would hinder the fulfilment of the federal provision's purpose. [99] Recently, in Quebec (Attorney General) v. Canada (Human Resources and Social Development), [2011] 3 S.C.R. 635, 2011SCC 60,[11] the Supreme Court reiterated the difference, as follows: [17] In Quebec (Attorney General) v.

Canadian Owners and Pilots Association, 2010 SCC 39, [2010] 2 S.C.R. 536, at para. 64, theChief Justice stated that the doctrine of federal paramountcy is applicable to two forms of conflict: The first is operational conflict between federal and provincial laws, where one enactment says “yes” and the other says “no”, such that“compliance with one is defiance of the other”: Multiple Access Ltd. v. McCutcheon, (SCC), [1982] 2 S.C.R. 161, at p.191, per Dickson J. In Bank of Montreal v.

Hall, (SCC), [1990] 1 S.C.R. 121, p. 155, La Forest J. identified a secondbranch of paramountcy, in which dual compliance is possible, but the provincial law is incompatible with the purpose of federallegislation: see also Law Society of British Columbia v. Mangat, 2001 SCC 67, [2001] 3 S.C.R. 113, at para. 72; [British Columbia(Attorney General) v. Lafarge Canada Inc., 2007 SCC 23, [2007] 2 S.C.R. 86], at para. 84. Federal paramountcy may thus arise fromeither the impossibility of dual compliance or the frustration of a federal purpose: [Rothmans, Benson & Hedges Inc. v.

Saskatchewan,2005 SCC 13, [2005] 1 S.C.R. 188], at para. 14. [100] In this case, the Attorney General of Canada argues only the second category of conflict in his intervention, a conflict theAttorney Ge

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