Québec consumer protection litigation trends

Significant amendments to CPA: Bill 29

The National Assembly adopted Bill 29, the Act to protect consumers from planned obsolescence and to promote the durability, repairability and maintenance of goods. This Act introduces significant amendments to the Québec Consumer Protection Act (CPA) in order to:

• prohibit merchants (which include manufacturers) from trading in goods for which obsolescence is “planned” and prohibit the use of techniques which make it more difficult for consumers to maintain or repair goods;
• impose a warranty of “good working order”, the duration of which will be determined by regulation, covering the cost of repairs (parts and labour) for certain new goods and used cars;
• require merchants to make available the parts needed to service and repair those goods which are covered by the new warranty “for a reasonable time after the contract has been entered into”, or failing that, to replace the goods free of charge or to refund their purchase price;
• introduce a regime of monetary administrative penalties administered by the Office de la protection du consommateur (OPC), along with penal sanctions, for any breach of the CPA;
• significantly increase the maximum fines in penal proceedings, which, in some cases may be as high as $125,000 per offence, or an amount equivalent to 5% of the merchant’s worldwide sales in the previous financial year; and
• provide that any directors, officers, mandataries or representatives of an organization who commit an offence under the CPA or its regulations are presumed to have also committed the offence, unless it is established that they exercised due diligence.

The new provisions will come into force gradually over the next three years.

Consumer protection case law

Québec courts have been active in consumer matters over the past several months. We review three recent cases that help clarify the rights of consumers (and the duty of goods and service providers) under the CPA.

Negative value of a trade-in vehicle not a CPA violation: Banque de Montréal c. Chevrette, 2023 QCCA 516

The Court of Appeal granted an appeal of a Superior Court judgment authorizing a class action on behalf of persons having acquired a new vehicle with installment sales contracts in which the negative value relating to a debt from a trade-in vehicle was included in the new financed amount. Plaintiffs alleged that the practice of including (and refinancing) the negative value of a trade-in vehicle violated Article 148 of the CPA.

The Court of Appeal concluded that Article 148 CPA does not prohibit the trade-in of a good with a negative value if this negative value is properly indicated and included in the new installment sales contract. As a result, the Court settled that the total amount to be paid by the consumer would be higher than the advertised price of the new vehicle but this does not violate the CPA.

Because the sales contracts were made with independent dealerships, the Court of Appeal also found that there was no legal relationship between the plaintiffs and the manufacturers/distributors of the new vehicles.

Higher bar for evidence in misrepresentation claims: Duguay c. General Motors du Canada ltée, 2023 QCCS 3223

The Superior Court rejected a class action at the trial stage that had been launched against General Motors (GM) on behalf of all persons who purchased or long-term leased a Chevrolet Volt. The plaintiff alleged that GM had falsely represented the Chevrolet Volt in its promotional material as a car that, without exception, allowed daily trips without consuming gasoline or emitting greenhouse gasses. The plaintiff also claimed that GM had failed to disclose an important fact by not mentioning that the internal combustion engine would activate in cold weather despite a fully charged battery.

The Court concluded that:

• the plaintiff had not proven that group members had consulted the impugned advertisements and that a “credulous and inexperienced” consumer who read the advertisements would have known that the vehicle’s electric propulsion system could have been overridden by the internal combustion system in cold weather;
• GM did not fail to disclose any important facts, since the activation of the internal combustion engine in cold weather was not a determining factor in the consumer's consent to enter into a purchase or lease agreement for the vehicle, and also because this fact was mentioned in both the operator’s manual and safety warnings relating to the vehicle; and
• there was not sufficient proximity between the contents of the representations qualified as false and misleading by the plaintiff and the purchase or lease of a Chevrolet Volt by class members.

The Court, therefore, rejected the class action seeking a reduction of the price paid, along with compensatory and punitive damages.

Director convicted for missing CPA disclosures: Directeur des poursuites criminelles et pénales c. St-Pierre, 2023 QCCS 3894

Nicholas St-Pierre was accused, as the sole director of a payday loan company, of having entered into contracts for the loan of money with consumers that did not meet the disclosures required by the CPA. He did not deny the facts alleged against him but argued that the contracts were open credit contracts and not contracts for the loan of money. The Superior Court heard the matter on the appeal of a Court of Québec judgment, which had acquitted Mr. St-Pierre.

The Court concluded that the contacts were, in fact, contracts for the loan of money because a) at the time of entering into the contracts, the consumer was required to make a request for an advance of money in the same amount as the credit limit; b) this amount was directly remitted to the consumer; c) repayment for the capital, interest and fees was made by predetermined, scheduled payments; and d) to obtain a subsequent loan, the consumer was required to have repaid at least 60% of the original loan amount and present a new loan application, which the company could refuse.

The Court found that these characteristics are incompatible with an open credit contract. The Superior Court, therefore, overturned the judgment of the Court of Québec, finding that the contracts did not contain the disclosures required by the CPA. Mr. St-Pierre was found guilty of the infraction in his role as director because he had knowledge of the infraction at the time it was committed by the company.