Appeal by the Appellant National Money Mart Co. from a decision dismissing its motion for a stay of a proposed class action because the class of proposed borrowers had all signed agreements requiring them to mediate and/or arbitrate their disputes with the Appellant
Administrative law – Criminal matters – Consumer protection – Class proceedings application – Arbitration agreements – Judicial review – Stay of proceedings – Jurisdiction of court – Compliance with legislation – Statutory interpretation
Briones v. National Money Mart Co.,  M.J. No. 154, 2014 MBCA 57, Manitoba Court of Appeal, June 5, 2014, M.A. Monnin, H.C. Beard and C.J. Mainella JJ.A.
Appellant, National Money Mart Co., sought a judicial review of an order dismissing its motion for a stay of a proposed class action proceeding brought by the Respondent, Jenny Briones, seeking to recover certain payday loan fees which she alleges were collected by the Appellant from her and other borrowers in violation of S. 347(1) of the Criminal Code.
Before the motion judge, the Appellant argued that the Respondent’s claim should be stayed because she entered into multiple written agreements requiring her to mediate and/or arbitrate her disputes with the Appellant.
The motion judge held that the central issue was whether as a matter of statutory interpretation the Unconscionable Transaction Relief Act (the “UTRA”) and the Consumer Protection Act (the “CPA”) limits the applicability of the arbitration clause and, if so, its extent and effect on the Respondent’s action. The motion judge concluded that the Arbitration Act was to be read as subject to the UTRA and the CPA and that the determination of whether those Acts override the arbitration agreement must be made based on the principles and approach of the Supreme Court of Canada in Seidel v. Telus Communications Inc., 2011 SCC 15 (“Seidel”). The motion judge declined to order a stay, relying on his interpretation of the UTRA and the CPA, and the decision in Seidel. The motion judge also exercised his discretion in declining to order a stay with respect to that portion of the Respondent’s claim that was clearly subject to arbitration and mediation. The motion judge held that arbitration must give way to litigation where there are overlapping matters that cannot be reasonably separated.
On appeal, the Appellant argued that the motion judge erred in his interpretation of the UTRA, the CPA and Seidel.
The Court of Appeal held that the question of whether a stay of the court action in this case should have been granted in favour of arbitration is answered, in large part, by the interpretation and application of the UTRA. The Court reviewed the jurisprudence, stating that courts have made strong statements about the important purpose of both consumer protection legislation such as the UTRA and private arbitration.
The Court of Appeal held that it was only possible in Manitoba to bring an action under the UTRA in the Court of the Queen’s Bench, to the exclusion of arbitration. The Court of Appeal relied upon the definition of “court” in s. 1 of the UTRA to mean the Court of the Queen’s Bench. The court then held that the interpretation of s. 1 as an exclusive definition of the meaning of “court” was assisted by the wording of s. 4 of UTRA. The opening words of that provision are, “In addition to any right that a debtor may have under this or any other Act or otherwise.” In the court’s view, the use of the words “or otherwise” indicates that, notwithstanding any other right that a debtor may have to obtain relief in respect to money lent, he also has a right to obtain relief from a judge of the Court of the Queen’s Bench. Further, s. 4 gives a person the right to apply to a “judge of the court” for relief. The court held that these words, taken together, constitute a clear statement of legislative intent as to the overriding jurisdiction of the Court of the Queen’s Bench, despite any contract to the contrary agreeing to settle disputes by arbitration.
The court agreed with the motion judge’s conclusion that the Court of the Queen’s Bench had exclusive jurisdiction over actions under the UTRA, to the exclusion of arbitration, albeit, on somewhat different grounds. The court concluded that the subject matter of the dispute, being an action under the UTRA, came within s. 7(2)(c) of the Arbitration Act as one that was “not capable of being the subject of arbitration under Manitoba law.”
With respect to the motion judge’s decision to decline an order to stay a portion of the Respondent’s claim, the court held that that decision was a logical and reasonable extension of the decision that the motion judge arrived at with respect to the substantive issue that was before him.
The Court of Appeal was not persuaded that the motion judge erred in denying the Appellant’s application to stay the proceeding against it, and dismissed the appeal with costs.
To stay current with the new case law and emerging legal issues in this area, subscribe here.