Administrative law – Class proceedings – Contracts – Arbitration agreements – Stay of proceedings – Jurisdiction – Compliance with legislation – Consumer protection – Public interest
Seidel v. TELUS Communications Inc.,  S.C.J. No. 15, 2011 SCC 15, Supreme Court of Canada, March 18, 2011, McLachlin C.J. and Binnie, LeBel, Deschamps, Fish, Abella, Charron, Rothstein and Cromwell JJ.
The Appellant, Ms. Seidel, entered into a cell phone contract with the respondent, TELUS Communications Inc.
The contract included a provision that required all disputes to be referred to mediation and then to arbitration. The arbitration clause also included a sentence stating that the customer waives any right they may have to commence or participate in any class action against TELUS. Ms. Seidel felt that TELUS had misrepresented the way her minutes were calculated. She filed a statement of claim in the Supreme Court of British Columbia against TELUS. She sought relief under ss. 171 and 172 of the BC Business Practices and Consumer Protection Act (the “BPCPA”) and she sought certification to act as a representative of a class of other customers.
TELUS applied for a stay of proceedings, arguing that the arbitration clause in the contract prevented her from commencing an action, let alone a class action. The trial judge denied TELUS’ application on the basis it was premature to do so before the certification application had been decided. The BC Court of Appeal allowed TELUS’ appeal and entered a stay of Ms. Seidel’s action in its entirety, since there was an arbitration clause for all disputes.
The majority of the Supreme Court of Canada focused on the critical provisions in the BPCPA; namely, ss. 3 and 172. Section 3 states “Any waiver or release by a person of the person’s rights, benefits or protections under this Act is void except to the extent that the waiver or release is expressly permitted by this Act.”
Section 172 states that “a person other than a supplier, whether or not the person bringing the action has a special interest or any interest under this Act or is affected by a consumer transaction that gives rise to the action, may bring an action in Supreme Court…” to enforce the statute’s consumer protection standards.
The majority concluded that Ms. Seidel’s action must be allowed to proceed notwithstanding the mediation/arbitration clause in the contract since she was claiming for s. 172 remedies in respect of “rights, benefits or protections” conferred by the BPCPA. The majority therefore granted the appeal, in part, and allowed her claim under s. 172 to go forward as a candidate for certification.
The majority’s decision did not address the issue of whether her s. 172 claims should be certified as a class action. That issue was left to be determined by the courts of BC. The majority’s decision only dealt with Ms. Seidel’s ability to bring an action under s. 172.
As an alternative argument, TELUS said that the class action portion of the arbitration clause was distinct from the remainder of the clause and was therefore still enforceable. The majority rejected this submission and held that the arbitration clause did not prevent Ms. Seidel from commencing a personal or representative action seeking relief under s. 172.
The minority reasoned that the majority’s focus of ss. 3 and 172 of the BPCPA was influenced by the majority’s view that s. 172 was the result of a legislative decision to confer exclusive jurisdiction on the BC’s Supreme Court. The minority felt that interpretation was not appropriate given the significant role of arbitration in BC.
The minority first outlined its decision that a stay of proceedings should be granted. The basis for this decision was that the BPCPA did not explicitly foreclose the use of arbitration as a vehicle for the resolution of disputes under that Act. Therefore, Ms. Seidel’s claim could either be submitted to arbitration or to the courts and, in those circumstances, must first be submitted to arbitration. The minority held that the challenge to the validity of the arbitration agreement was a question that had to first be considered by an arbitrator according to the provisions of the Commercial Arbitration Act.
The minority reviewed ss. 171 and 172 of the BPCPA, as well as the remedies available to arbitrators. The minority noted that an arbitrator can adjudicate a monetary claim under s. 171 and can also award a declaration or an injunction as available under s. 172. The minority concluded that the legislature had not barred ss. 171 and 172 claims from being submitted to arbitration. In other words, the reference to the BC Supreme Court in s. 172 did not confer exclusive jurisdiction on that Court to adjudicate claims under that section. The minority further held that the purpose of that reference was to clarify that the BC Supreme Court and not the BC Provincial Court may grant declaratory and injunctive relief.
The minority would have dismissed the appeal.
This case was digested by Scott J. Marcinkow of Harper Grey LLP. If you would like to discuss this case further, please feel free to contact him directly at email@example.com or review his biography at http://www.harpergrey.com.
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