Consumer Protection from Deceptive and Unconscionable Acts (11:IV)

A. Does the Act Govern the Contract?

For a contract to fall under the Business Practices and Consumer Protection Act [BPCPA], the contract must be 1) a consumer transaction, between 2) a consumer and 3) a supplier, as defined by section 1. Each of the three criteria must be fulfilled before relying on the BPCPA.

1. Consumer Transaction

A consumer transaction is a dealing that:

• a) involves a supply of goods, services, membership in a club or organization, or real property by a supplier to a consumer, or
• b) is a solicitation or promotion by a “supplier” with respect to the above mentioned transaction; and is for purposes that are primarily personal, family, or household.

Except in Parts 4 and 5 of the BPCPA, a consumer transaction includes a solicitation of a consumer by a supplier for a contribution of money or other property by the consumer.

The Act does not apply to securities as defined by the Securities Act, RSBC 1996, c 418 or contracts of insurance under the Insurance Act, RSBC 1996, c 226.

2. Consumer

The consumer may reside inside or outside BC. A consumer is an individual, other than a supplier, who participates in a consumer transaction for primarily personal, family, or household purposes. The definition of consumer in section 1 does not include a guarantor of the consumer who actually participated in the transaction.

3. Supplier

A supplier means a person, whether in BC or not, who in the course of business participates in a consumer transaction by:

• a) supplying goods, services, or real property to a consumer; or
• b) soliciting, offering, advertising, or promoting with respect to a transaction referred to in paragraph (a) of the definition of “consumer transaction”.

A supplier also includes the successor to, or assignee of, any rights or obligations of the supplier and, except in Parts 3 to 5, includes a person who solicits a consumer for a contribution of money or other property.

The definition of supplier in section 1 requires that the transaction occur “in the course of the supplier’s business”. Thus, private sales and transactions made by people who are not in the business of dealing with such goods are generally exempt from the BPCPA. If a consumer buys a used car advertised in a newspaper ad placed by a private person, the consumer will likely be restricted to the remedies found in the SGA or at common law. Some remedies in the SGA are also available only when goods are sold in the ordinary course of business.

Several suppliers can be involved in one transaction. Therefore, in order for the consumer to sue, he or she need not have a contract with the supplier who made a deceptive representation or committed an unconscionable act. For example, a consumer buys a car from a dealer and the contract is assigned to a financial institution. The vendor would be a supplier, as would the finance company attempting to collect on the contract (see section 15). Since privity of contract is not necessary, each of the suppliers would be liable under the BPCPA if they engaged in deceptive or unconscionable practices.

According to section 6, advertisers who, on behalf of another supplier, publish a deceptive or misleading advertisement are not liable for damages, court actions, or offences, if they are acting in good faith when they accept advertisements for publication. If, however, they knew or ought to have known that the advertisement had the capability, tendency, or effect of deceiving or misleading, then they too may be liable as a supplier under the BPCPA.

B. Defining a “Deceptive or Unconscionable Act or Practice”

For the consumer to have a remedy, the supplier’s conduct must involve deceptive or unconscionable acts or practices.

Section 4 of the BPCPA describes “deceptive” acts or practices. Section 8 of the BPCPA describes “unconscionable” acts or practices.

1. Deceptive Acts

A deceptive act or practice is a representation (whether oral, written, visual, descriptive, or other) or any conduct by the supplier that has the capacity, tendency, or effect of deceiving or misleading a consumer or guarantor.

Section 4(3) sets out an extensive but non-exhaustive list of deceptive practices.

If a certain practice is not listed in 4(3), it may still be considered deceptive. The term “deceptive act or practice” was also found in BC’s old Trade Practices Act, which was repealed by the BPCPA in 2004. Thus, looking back at the old Trade Practice Act jurisprudence can shed light on the meaning of “deceptive act or practice.”

The term was interpreted by the court in Director of Trade Practices v. Household Finance Corporation, [1976] 3 W.W.R. 731 (B.C.S.C.) [Household Finance]. To be considered deceptive, it is not necessary that the consumer actually be deceived or misled so long as the act or practice has the “capability, tendency or effect of deceiving or misleading a person”. Such an act may occur before, during or after the transaction.

Household Finance suggests that a practice is deceptive for purposes of the BPCPA if it causes the consumer to commit an error in judgment.

A plaintiff consumer relying on the supplier’s deceptive practice for an action should show:

• a) that he or she was actually deceived by the deceptive practice;
• b) that he or she relied on the deception to the extent that an error in judgment resulted from the deception; and
• c) that the error in judgment caused loss.

The Director need only show that a deceptive practice would tend to cause consumers to make an error in judgment, but does not need to show that any consumer made an error in judgment, to enforce the Act against a supplier.

It is not necessary that there be any deliberate intention to deceive for a practice or act to be deceptive (Findlay v. Couldwell (1976), 5 W.W.R. 340).

The BPCPA, similarly to the Trade Practices Act, should be interpreted as imposing a high standard of “candour, especially on suppliers who choose to commend their wares” (Rushak v. Henneken, [1991] BCJ No 2692 (CA) (QL) [Rushak]). Where there is an embellishing endorsement of the goods, and the supplier knows the goods may be defective in an important respect, these facts must be disclosed (Rushak, above). For the consumer to set aside the consumer transaction on the basis that the supplier engaged in a deceptive act or practice, the representation must be material – what is material depends on the individual circumstances of the transaction (Rushak v Henneken, [1986] BCJ No 3072 (SC)).

The court may draw the conclusion that a practice is deceptive on the basis of vague contractual language in circumstances where that language allowed the supplier to claim that additional work was not part of the original contract: see British Columbia (Director of Trade Practices) v Van City Construction, [1999] BCJ No 2033.

2. Unconscionable Acts

Sections 7 to 9 of the BPCPA now set out clear prohibitions. Unconscionable acts involve high pressure tactics or demanding consideration far in excess of the market, and may occur before, during or after the consumer transaction. Under s 10(1), if an unconscionable act or practice occurred in respect of a consumer transaction, that consumer transaction is not binding on the consumer or guarantor. The court will look at the particular vulnerabilities of the consumer, such as mental infirmity, ignorance, illiteracy, age or inability to understand the character, nature or language of the consumer transaction, which will trigger the reviewability of that transaction in the consumer’s mind. Both the common law and statutes hold the supplier to a stringent standard, demanding that he or she not act unreasonably in order to protect his or her own interests.

Under s 9(2), if it is alleged that a supplier committed or engaged in an unconscionable act or practice, the burden of proof is on the supplier to show that the unconscionable act or practice was not committed.

NOTE: As above, s 8(3) sets out a list of circumstances that the court must consider when determining whether a practice is unconscionable. Again, this list is not comprehensive, as the court must consider all of the surrounding circumstances of which the supplier knew or ought to have known.

C. Remedies and Sanctions

1. Damages Recoverable by Consumers

Under s 171 of the BPCPA, a consumer may commence a civil action seeking damages for loss due to a deceptive or unconscionable act or practice. As with other civil actions, punitive damages or restitution may also be available. Small Claims Court may be used if the claim does not exceed $25,000.

2. Transaction Unenforceable by Supplier

Under s 10(1), where there is an unconscionable act or practice in a consumer transaction, that transaction is unenforceable by the supplier.

3. Injunction, Declaration and Class Action

Under s 172, any person, whether or not that person has a special interest in or is affected by a consumer transaction, may bring an action seeking declaratory or injunctive relief. This involves seeking to have the court declare an act to be deceptive or unconscionable and to have the court grant an injunction restraining the supplier from engaging further in such acts. Under s 172(2) the Director may bring an action on behalf of consumers generally or a designated class of consumers.

The BPCPA stipulates that while the Provincial Court has jurisdiction for civil actions under s 171, actions under s 172 must be brought in Supreme Court.

For an example of a class action suit dealing with the BPCPA, see Dahl v Royal Bank of Canada, 2006 BCCA 369. Credit card debtors brought a class action suit against the Royal Bank of Canada, the Canadian Imperial Bank of Commerce, and the Bank of Montreal. In the plaintiffs’ Statement of Claim, they asserted that the defendants failed to disclose the true cost of borrowing by providing the transaction dates for cash advances on their monthly statements rather than the posting dates (the dates the money was actually advanced), allowing more interest to be charged; the court, however, ultimately rejected this argument.

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