CITATION: Travel Industry Council of Ontario v. Canadian Imperial Bank of Commerce, 2012 ONSC 131
COURT FILE NO.: 228/11
DATE: 20120221
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
THEN R.S.J., JENNINGS AND SWINTON JJ.
B E T W E E N:
TRAVEL INDUSTRY COUNCIL OF ONTARIO
Respondent (Appellant)
- and -
CANADIAN IMPERIAL BANK OF COMMERCE
Applicant (Respondent on Appeal)
Soussanna S. Karas, for the Appellant
Laurie A. MacFarlane, for the Respondent on Appeal
HEARD at Toronto: December 7, 2011
Swinton J.:
Overview
[1] The Travel Industry Council of Ontario (“TICO”) appeals a decision of the Licence Appeal Tribunal (“the Tribunal”) dated March 31, 2011 ordering TICO to pay the respondent Canadian Imperial Bank of Commerce (“CIBC”) $15,117.85 from the Travel Industry Compensation Fund on the basis that CIBC was a customer within s. 57(1) of O. Reg. 26/05, made under the Travel Industry Act, 2002, S.O. 2002, c. 30, Sched. D (“the Act”).
[2] For the reasons that follow, I would allow the appeal and set aside the decision of the Tribunal, as the CIBC is not a customer eligible to claim compensation from the Fund.
The Regulatory Framework
[3] TICO is a not-for-profit corporation mandated to administer and manage the Act and O.Reg. 26/05, made under the Act (“the Regulation”). This legislation governs approximately 2,500 travel agents and travel wholesalers registered in Ontario. In addition to the regulation of the travel industry, the Board of Directors of TICO administers and manages the Travel Industry Compensation Fund (“the Fund”).
[4] Subject to the Regulation, the Fund provides reimbursement of monies paid by a customer to or through an Ontario registered travel agent for travel services that were not provided due to the bankruptcy, insolvency or closure of an Ontario-registered travel agent or travel wholesaler or an end supplier airline or cruise line, where reimbursement has not otherwise been provided. Section 57 of the Regulation sets out the eligibility requirements for reimbursement.
[5] Of particular importance for purposes of this appeal is s. 57(1), which states:
A customer is entitled to be reimbursed for travel services paid for but not provided if,
(a) the customer paid for the travel services and the payment or any part of it was made to or through a registered travel agent ...
[6] Accordingly, eligibility for reimbursement requires that the customer have paid for travel services to or through a registered travel agent. As well, he or she must have made a demand for payment from the registered travel agent or the appropriate registered travel wholesaler, any other person who has received the customer’s money and any other person who may be legally obliged to reimburse or compensate the customer, including a person obliged by a contract of insurance (s. 57(1)(b)).
[7] Furthermore, the customer must not have been reimbursed by a travel agent or a travel wholesaler or by any other person who received the customer’s money or by any other person who may be legally obliged to reimburse or compensate the customer (s. 57(1)(c)).
[8] Section 57(2) limits the amount of reimbursement to the amount paid to the travel agent for travel services that were not provided. Section 57(3) then sets out a detailed list of circumstances where the customer is not entitled to reimbursement, including s. 57(3)6 - travel services obtained with a voucher, certificate, coupon, or similar document that the customer did not pay for - and s. 57(3)7 – travel services that the customer did not pay for with cash or by a cheque, credit card or other similar payment method.
Factual Background
[9] Customers of CIBC who have a certain type of credit card can accumulate points through use of the card and redeem those points for travel services purchased through Merit Travel Group Inc. (“Merit”). The terms of this Loyalty Program state that reward points are non-refundable, non-exchangeable and non-transferable. They have no monetary value and cannot be exchanged for cash.
[10] Merit is a registered travel agent under the Act. A CIBC credit card holder can pay for travel services obtained through Merit either by points, credit card or a combination of both. If the travel supplier fails to provide travel services to the customer, CIBC may attempt to arrange a suitable replacement or may choose to credit the redeemed points back to the customer, but it is not required to do so.
[11] In the present case, CIBC credit card holders had made arrangements through Merit for travel with Conquest Vacations Inc. (“Conquest”). Merit provided an invoice to these customers confirming the travel arrangements and the payment, including a breakdown of any cash portion and points redeemed.
[12] CIBC had an agreement with Merit whereby CIBC would reimburse Merit for the value of the reward points redeemed by customers who purchased travel services. This reimbursement occurred on a daily basis by wire transfer.
[13] On April 15, 2009, Conquest voluntarily terminated its registration with TICO and filed an assignment in bankruptcy. As a result, ten CIBC customers failed to receive travel services for which they had paid. CIBC voluntarily reversed the redemption of the points used by each customer, while CIBC Visa refunded any cash portion taken by Conquest.
[14] CIBC then submitted a claim for compensation from the Fund in the amount of $15,117.85. The TICO Board of Directors denied the claim on the basis that CIBC was not eligible for reimbursement, as it is not a “customer” for purposes of s. 57(1) of the Regulation.
The Tribunal’s Decision
[15] CIBC appealed the decision to the Tribunal, which allowed the appeal. The Tribunal observed that “customer” is not defined in the Act or Regulation. However, the Tribunal found assistance in interpreting the term by considering the definitions of customer in the regulations under the Quebec Travel Agents Act, R.S.Q., c. A-10 and the Ontario Real Estate and Business Brokers Act, 2002, S.O. 2002, c. 30, Sch. C, as well as the Shorter Oxford English Dictionary (Reasons, p. 8), and concluded that on the facts, CIBC was a customer within those three definitions.
[16] The Tribunal rejected TICO’s argument that the only customer was the person who made the travel arrangements and received the invoice. In the present case, according to the Tribunal, there were two customers: the consumer who made the travel arrangements and CIBC, which paid for the services, in whole or in part.
[17] The Tribunal also rejected the argument that the legislation was aimed solely at protecting the “travelling consumer”, noting that travel agents and travel wholesalers could also seek compensation under the Act.
[18] The Tribunal acknowledged that the CIBC customers would not have been able to claim compensation, since s. 57(3)6 of the Regulation precludes reimbursement for travel services obtained with a voucher, certificate, coupon or similar document that the customer did not pay for. However, the Tribunal held that the provision did not preclude a claim by CIBC, which had paid money to Merit for the travel services.
The Issues on Appeal
[19] There are two issues raised on this appeal: first, the appropriate standard of review and second, the reasonableness of the Tribunal’s decision.
The Standard of Review
[20] TICO argues that the standard of review is correctness, as the Tribunal was determining a pure question of law - the meaning of “customer” within s. 57(1) of the Regulation. As well, the decision enjoys no protection from a privative clause, and the Tribunal has no particular expertise in the regulation of the travel industry.
[21] CIBC argues that the standard of review is reasonableness, as the issue before the Tribunal was one of mixed fact and law - namely, the determination whether CIBC was a “customer” for purposes of a claim to the Fund, given the facts of this case.
[22] The Tribunal exercises appellate jurisdiction under a large number of statutes, including the Travel Industry Act: for example, the Consumer Protection Act, the Funeral Directors and Establishments Act, the Liquor Licence Act, the Motor Vehicle Dealers Act, and the Ontario New Home Warranties Plan Act, among others. While Tribunal members will have some familiarity with these statutes, this is not an expert tribunal like the Labour Relations Board or the Securities Commission which has particular and specialized expertise in interpreting and applying its home legislation. Moreover, Tribunal decisions do not enjoy the protection of a privative clause.
[23] Nevertheless, this Court has held that deference is owed to the Tribunal where it makes findings of fact or mixed fact and law. For example, in Prestige Toys Ltd. v. Ontario (Motor Vehicle Dealers Act, Registrar), 2009 43657 (ON SCDC), [2009] O.J. No. 3437, the Divisional Court held that the standard of reasonableness applied to a Tribunal decision respecting registration, as the Tribunal was applying a statutory provision with which it had particular familiarity – namely, whether the past conduct of the registrant gave reasonable grounds for belief that it would not carry on business in accordance with law, honesty and integrity. As well, the legal and factual issues were intertwined (at para. 15).
[24] The majority in Travel Industry Council of Ontario v. Cordeiro, 2011 ONSC 80 (Div. Ct.) at para. 32, held that the standard of review was reasonableness in a case involving a claim to compensation under the Fund, as this raised a question of mixed fact and law. See, as well, Capmare v. Travel Industry Council of Ontario, [2010] O.J. No. 20553 (Div. Ct.) at para. 8.
[25] In contrast, this Court has also held that the standard of correctness applies to the Tribunal’s interpretation of a statute (Ontario (Board of Funeral Services, Registrar) v. McGarry, [2010] O.J. No. 1473 (Div. Ct.) at para. 2; JRC Developments Ltd. v. Tarion Warranty Corp., 2010 ONSC 6205, [2010] O.J. No. 5089 (Div. Ct.) at para. 2
[26] In the present case, the Tribunal had to determine the eligibility of CIBC to receive compensation from the Fund. In doing so, it had to interpret the meaning of “customer” within s. 57(1) of the Regulation and then apply that definition to the facts of the case. This raises a question of mixed fact and law. However, the question of law is not closely intertwined with the facts, as in Prestige, above.
[27] The nature of the question, the lack of a privative clause and the lack of specialized expertise might well suggest a standard of review of correctness to the interpretation of s. 57(1), but in the circumstances of this case, I need not resolve that issue. Even if the standard of reasonableness applies, the decision is this case is an unreasonable one.
Was the decision reasonable?
[28] An inquiry into reasonableness requires the court to consider the reasons offered by the tribunal to determine whether its decision falls within a range of possible, acceptable outcomes, which are defensible in respect of the facts and the law (Dunsmuir v. New Brunswick, 2008 SCC 9 at para. 47). See, as well, Newfoundland and Labrador Nurses’ Union v. Newfoundland and Labrador (Treasury Board), 2011 SCC 62 at para. 14: “the reasons must be read together with the outcome and serve the purpose of showing whether the result falls within a range of possible outcomes.”
[29] More recently, the Supreme Court of Canada stated, in Alberta (Information and Privacy Commissioner) v. Alberta Teachers’ Federation, 2011 SCC 61 at para. 54:
… deference under the reasonableness standard is best given effect when administrative decision makers provide intelligible and transparent justification for their decisions, and when courts ground their review of the decision in the reasons provided.
[30] In the present case, the first task for the Tribunal was to determine the meaning of the word “customer” in s. 57(1) of the Regulation. That required it to apply the proper principles of statutory interpretation.
[31] In approaching its task, the Tribunal correctly made reference to the modern approach to statutory interpretation, adopted by the Supreme Court of Canada in Rizzo & Rizzo Shoes Ltd. (Re), 1998 837 (SCC), [1998] 1 S.C.R. 27. In Rizzo, the Court stated (at para. 21):
Although much has been written about the interpretation of legislation (see, e.g., Ruth Sullivan, Statutory Interpretation (1997); Ruth Sullivan, Driedger on the Construction of Statutes (3rd ed. 1994) (hereinafter "Construction of Statutes"); Pierre-André Côté, The Interpretation of Legislation in Canada (2nd ed. 1991)), Elmer Driedger in Construction of Statutes (2nd ed. 1983) best encapsulates the approach upon which I prefer to rely. He recognizes that statutory interpretation cannot be founded on the wording of the legislation alone. At p. 87 he states:
Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.
[32] While the Tribunal purported to adopt this approach, in fact, it failed to apply the correct principles of statutory interpretation and, therefore, its decision does not deserve deference.
[33] Instead of commencing its analysis with the language of s. 57(1) of the Regulation within the legislative context, the Tribunal relied on definitions of “customer” in two other unrelated regulations (one of which was from another province) and in a dictionary. It never undertook a systematic analysis of the term “customer”, either within s. 57 as a whole or with regard to the use of the term elsewhere in the Regulation.
[34] Moreover, although the Tribunal looked at other parts of the Regulation to determine the legislative purpose, it erred in finding that one purpose was to protect business entities such as travel agents and travel wholesalers. In reaching that conclusion, the Tribunal failed to take into account that there is no entitlement for a travel agent or a travel wholesaler to claim compensation from the Fund unless they have first compensated the customer, and the customer is eligible for compensation. Thus, while these business entities are sometimes protected by the Fund, this is done to facilitate compensation for customers.
[35] The first step in statutory interpretation is to determine the grammatical and ordinary meaning of the provision. In the present case, “customer” is not defined in the Act nor in the Regulation, although it is a term used throughout the Regulation.
[36] Subsection 57(1) states that a customer is entitled to be reimbursed for travel services paid for but not provided if the customer paid for the travel services through a registered travel agent. The subsection does not explicitly say that the customer is the person who actually made the travel arrangements or intended to make use of the travel services.
[37] However, the Supreme Court of Canada has often noted that the grammatical and ordinary sense of the words is not determinative. As it said in ATCO Gas and Pipelines Ltd. v. Alberta (Energy and Utilities Board), 2006 SCC 4, [2006] 1 S.C.R. 140 at para. 48, “The Court is obliged to consider the total context of the provisions to be interpreted, no matter how plain the disposition may seem upon initial reading ...”. Therefore, in the present case, it is necessary to consider the entire legislative scheme and the purpose of the legislation in order to determine the meaning of “customer” in s. 57(1) of the Regulation.
[38] Subsection 1(1) of the Act defines a travel agent as “a person who sells, to consumers, travel services provided by another person”. While that definition does not refer to “customers”, the term “customer” is used throughout the Regulation to describe the relationship between a travel agent and the purchaser of travel services. Therefore, one needs to consider the Regulation as a whole in order to determine the meaning of “customer” in s. 57(1).
[39] As Ruth Sullivan has stated in Sullivan on the Construction of Statutes, 5th ed. (Markham, Ont.: LexisNexis Canada Inc., 2008) at p. 361, “it is assumed that language is used consistently, that tautology is avoided, that the provisions of an Act all fit together to form a coherent and workable scheme.” As well, there is a presumption that words have the same meaning throughout a statute (Sullivan, p. 215).
[40] If one looks to the entire Regulation, one finds a series of provisions that regulate the relationship of the travel agent and the customer who is seeking to obtain travel services from it. Subsection 12(1), for example, regulates the sale of travel services, requiring registrants to disclose certain information about the registrant to the customer. Section 16 requires the registrant to keep records about persons who counsel customers in relation to travel services.
[41] Section 33 sets out requirements respecting disclosure of the price of travel services. It requires information about the total amount the “customer” will be required to pay for the travel services, including a reasonable description of the travel services and a statement of any conditions.
[42] Section 36 sets out the duties of a travel agent with respect to disclosure and advice. Notably, it states that “[b]efore entering into an agreement with a customer for travel services, and before taking payment or credit card information from the customer”, the travel agent must disclose conditions related to the purchase of travel services, the total price, the travel dates and a fair and accurate description of the travel services to be provided, explain requirements or limitations relating to transfer or cancellation of travel services, advise the customer about the availability of trip cancellation insurance and out-of-province health insurance, and advise about travel documents for foreign travel, among other information. Section 37 deals with the travel agent’s obligation to advise customers of changes after the purchase of travel services.
[43] Clearly, the “customer” contemplated by ss. 33, 36 and 37 is the person dealing with the travel agent for the possible purchase of travel services. It would not include an entity like CIBC, which had no relationship with Merit, the travel agent, for the purpose of making travel arrangements.
[44] Section 38 sets out the obligation of the travel agent to provide the customer with a statement or invoice after the sale of the travel services. Again, it is clear that the customer is the one who has dealt with the travel agent for the purposes of arranging the travel. The invoice is to include the name of the customer who purchased the travel service and must say whether the customer was offered trip cancellation insurance and whether it was purchased. The name of the travel counsellor who made the booking must be disclosed, again suggesting that the customer is the one who is dealing with the travel agent and who arranges the travel.
[45] Section 39 requires a registrant to take reasonable measures to verify the condition of accommodation to ensure its quality at the time “the customer uses the travel services”. In certain circumstances, a refund or offer of alternative accommodation must be made to the customer. Section 40 requires notice to a customer in certain circumstances, and requires a refund or an offer of comparable travel services. Section 42 requires the travel agent to verify certain travel-related documents before giving them to the “customer who purchased the travel services from the travel agent.”
[46] Thus, when the term “customer” is looked at in other parts of the Regulation, it refers to the person who deals with the travel agent to arrange the purchase of travel services, who is invoiced for the travel, and who will be affected by changes in prices or factors affecting the quality or availability of the services purchased. CIBC had no dealings with Merit to select and arrange the travel services for the credit card holders, and certainly was not a customer within the earlier parts of the Regulation.
[47] That raises the issue whether the word “customer” in s. 57(1) must have the same meaning as it had earlier in the Regulation: is the customer only the one who dealt with the travel agent to arrange the travel services and who paid for them, or can the term encompass an entity which provides a method of indirect payment for travel services purchased by the person who made the travel arrangements with the travel agent? To answer that question, it is useful to consider the purpose of the legislation.
[48] The Tribunal acknowledged that one purpose of the legislation is to provide consumer protection. That conclusion is consistent with statements of the Court of Appeal in Ontario (Travel Industry Council of Ontario) v. Gray, 2010 ONCA 518 describing the “clear purpose” of the Act “to regulate the travel industry in the interest of the travelling public” (at para. 18). In that sense, the Court of Appeal held, the Act is consumer protection legislation. Further on, the Court described the Act and regulation as “an integrated scheme for the regulation of the travel industry in the interests of the travelling public” (at para. 23).
[49] However, the Tribunal concluded that there was a broader purpose in the Regulation, with the result that business entities are allowed to make claims for compensation, because travel agents and travel wholesalers can also make claims against the Fund. As I said earlier in these reasons, the Tribunal failed to consider that travel agents and travel wholesalers can only make such claims if they have first reimbursed the customer, and if the customer would have a claim on the Fund (ss. 58 and 59). Moreover, they can make no claim for their commissions against the Fund. Thus, the legislative scheme protects the travel agent or travel wholesaler only as a way to encourage them to reimburse the customer for the travel services. In my view, these provisions, properly considered, reinforce the conclusion that the purpose of the Fund provisions in the Regulation is to protect the consumer of travel services - or, in the words of the Court of Appeal, the “travelling public”.
[50] Moreover, when s. 57 is considered as a whole, it is evident that it is intended to provide compensation only in certain limited circumstances to these customers. It requires that they first exhaust other avenues of reimbursement or compensation, and it excludes claims from customers in specified situations, including the situation where the customer has obtained the travel services through a voucher or prize or has not paid for them in cash or by credit card (s. 57(3)6 and 7), or where alternative services were provided. Thus, the Fund is to provide compensation only in limited circumstances for the consumer of travel services who has engaged in a transaction for purchase and sale of those travel services with a travel agent.
[51] In the present case, the customers of Merit, the travel agent, were the CIBC credit card holders who made the travel arrangements and paid for them in full, either with their credit cards or their points. It was these individuals who received an invoice from Merit which listed the required information with respect to the purchase. The invoices showed payment was made in full.
[52] CIBC was not a customer within s. 57(1), but rather a medium to a payment scheme whereby reward points were converted to cash. The relationship between CIBC and Merit was not that of customer and travel agent for the purpose of obtaining travel services; rather, they had a contractual relationship for the administration of the Loyalty Program.
[53] While a standard of reasonableness requires deference to the Tribunal, this is a case where the reasons of the Tribunal do not provide an intelligible and justifiable explanation for its conclusion. The Tribunal made a fundamental error of law in the way in which it approached the interpretation of the Regulation. In particular, the Tribunal failed to do the required analysis of the overall legislative context. As a result, it gave an unreasonable interpretation to s. 57(1) of the Regulation in finding that CIBC was a customer.
Conclusion
[54] For these reasons, I would allow the appeal and set aside the decision of the Tribunal ordering compensation from the Fund to the CIBC. As neither party seeks costs, none are awarded.
Swinton J.
Then R.S.J.
Jennings J.
Released: February 21, 2012
CITATION: Travel Industry Council of Ontario v. Canadian Imperial Bank of Commerce, 2012 ONSC 131
COURT FILE NO.: 228/11
DATE: 20120221
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
THEN R.S.J., JENNINGS AND SWINTON JJ.
B E T W E E N:
TRAVEL INDUSTRY COUNCIL OF ONTARIO
Respondent (Appellant)
- and -
CANADIAN IMPERIAL BANK OF COMMERCE
Applicant (Respondent on Appeal)
REASONS FOR JUDGMENT
Swinton J.
Released: February 21, 2012