Court File and Parties

Citation: Ryan Wright v. United Parcel Service Canada Ltd., 2012 ONSC 3287 Divisional Court File No.: CV-11-435516-00CP Date: 2012-06-14 Superior Court of Justice – Ontario Divisional Court

Re: Ryan Wright and Julia Zislin, Plaintiffs - v. - United Parcel Service Canada Ltd., Defendant

Before: Mr. Justice H.J. Wilton-Siegel J.

Counsel: John A. Campion and Antonio Di Domenico, for the Defendant/Appellant C. Scott Ritchie, Michael A. Eizenga, Daniel Bach and Emilie Maxwell, for the Plaintiffs/Respondents

Heard: May 29 and 30, 2012

Endorsement

[1] The defendant, United Parcel Services Canada Ltd. (“UPS” or the “defendant”) seeks leave to appeal the order dated August 26, 2011 of Horkins J. (the “Order”) certifying this action as a class proceeding under the Class Proceedings Act, 1992, S.O. 1992, c. 6 (the “CPA”).

Background

[2] This case arises out of two international shipping transactions in which the plaintiffs were the consignees of the goods shipped. In each case, the consignor engaged UPS to ship the goods from points of origin in the United States to the consignee’s residences in Ontario. In the case of Ryan Wright, the consignor signed a “waybill” at the time the goods shipped were picked up by, or delivered to, UPS. In the case of Julia Zislin, the consignor signed an international parcel shipping order (an “IPSO”) when she delivered the shipped goods to UPS at a UPS Store in the United States. The facts pertaining to the UPS shipping arrangements and brokerage activities are set out in the endorsement dated August 26, 2011 of Horkins J. (the “Endorsement”) and need not be repeated here.

[3] Pursuant to the Order, the motion judge defined the plaintiff class as follows:

All Consumers within the meaning of the Consumer Protection Act, resident in Ontario who have paid UPS, fees charged by UPS which include Customs Brokerage Fees, Disbursement Fees (also known as Bond Fees) and C.O.D. Fees and where a waybill or International Parcel Shipping Order was used in shipping the parcel from July 30, 2005 through August 26, 2011…

The Order declares the claims being asserted on behalf of the class to be certain breaches of the Consumer Protection Act, 2002, S.O. 2002, c. 30, Sch. A (the “Act”) and s. 347 of the Criminal Code of Canada, R.S.C. 1989, c. C-46, as amended. The motion judge certified the following nine common issues:

Common issue #1:

(a) Does the standard form waybill include a term providing for: (a) the payment of the ‘Brokerage’ Fees (b) the payment of the ‘Disbursement’ or ‘Bond’ Fees; and/or (c) the payment of the ‘C.O.D. Fees’?

(b) Does the standard form International Parcel Shipping Order include a term providing for: (a) the payment of the ‘Brokerage’ Fees; (b) the payment of the ‘Disbursement’ or ‘Bond’ fees; and/or (c) the payment of the ‘C.O.D.’ Fees?

Common issue #2:

(a) Does the waybill include a term for the provision of brokerage services?

(b) Does the International Parcel Shipping Order include a term for the provision of brokerage services?

(c) If not, was the provision of “brokerage services” unsolicited?

Common issue #3:

(a) Were the statements complained of in the Claim “false, misleading or deceptive representations”?

(d) If so, were those representations unconscionable?

Common issue #4:

Did UPS use its custody and control of goods owned by the Class Members to force them to pay the Fees and, if so, whether that violates the Act?

Common issue #5:

(a) Is the Bond fee an interest charge?

(b) If the Bond fee is not an interest charge, whether UPS claimed it was?

(c) If UPS claimed the Bond fee was an interest charge but that was not the case, was that representation a false, misleading or deceptive representation, and, if so, whether that representation was unconscionable?

Common issue #6:

Are the contracts future performance agreements and, if so, whether the requirement for the same were met?

Common issue #7:

Was UPS unjustly enriched at the expense of the class?

Common issue #8:

What is the quantum of damages?

Common issue #9:

Are punitive damages owed?

Procedural Background

[4] In the Endorsement, Horkins J. also addressed, among other things, a motion of the representative plaintiffs for summary judgment in favour of the members of the entire class of plaintiffs in respect of a number of the common issues certified in the Order. The defendant has appealed the order of Horkins J. dated August 26, 2011 giving effect to this summary judgment (the “Summary Judgment Order”). The appeal is scheduled to be heard by the Court of Appeal on June 19, 2012.

[5] The issues in the Order and the issues in the Summary Judgment Order are related but separate. However, in view of the interrelated nature of these issues and the short time remaining until the hearing of the appeal of the Summary Judgment Order by the Court of Appeal, the parties have agreed that, at this time, the court will address only the issue of “unsolicited goods or services”, and the related issues in common issues #1 and #2. The remaining issues in the defendant’s leave motion are adjourned to a later date to be scheduled by counsel.

The Issue to be Addressed at This Time

[6] The critical issue for the court is common issue #2(c): was the provision of brokerage services “unsolicited”? It is understood that this issue refers to “unsolicited goods and services” under s. 13 of the Act. The defendant seeks leave to appeal the decision of the motion judge that this issue is appropriately addressed as a common issue in this action.

[7] “Unsolicited goods or services” are defined in s. 13(9) of the Act as goods or services “that are supplied to a consumer who did not request them”. There is little jurisprudence regarding this definition. I proceed, however, on the basis that goods or services for which a consumer agrees to pay the fee or charge demanded by the provider are not “unsolicited goods or services”.

[8] On this basis, if a consignee agrees to pay for brokerage services on the doorstep, such services are not “unsolicited goods or services”. Similarly, if a consignee has knowledge that UPS will perform brokerage services and will charge a fee for those services at the time the shipping contract is entered into with UPS, it is certainly arguable that the act of entering into the shipping contract without objecting to the payment of additional fees for the brokerage services constitutes consent to the performance of the brokerage services and an agreement to pay the related charges, with the result that the brokerage services cannot be characterized as “unsolicited goods or services”. There are, in fact, a number of different circumstances that could give rise to such a result.

[9] First, in the case of the waybill, the terms of the UPS Rates and Services Guide, which are published on the UPS website, could be incorporated into the waybill by virtue of the express language of the waybill (it is not suggested there is any similar language in the IPSO). This issue is, however, properly dealt with as a common issue in common issue #1(a) or #2(a).

[10] Second, the consignee could be aware that UPS performs brokerage services and charges fees for these services by virtue of prior shipping experience with UPS or other shippers. In this case, it is arguable that the customer agreed to pay for such services at the time of shipment.

[11] Third, the consignor could have become aware that UPS performs brokerage services and charges a fee for such services as a result of a prior shipping history. In this case, the knowledge of the consignor would apparently be imputed to the consignee by virtue of the consignor’s deemed agency on behalf of the consignee in entering into the shipping contract. Similarly, the consignor could have had prior knowledge of these services from the UPS Rates and Services Guide which would be imputed to the consignee.

[12] Fourth, the consignee could have become aware of the fact that UPS would charge for brokerage services in addition to the cost of shipment as a result of references to those services, or to the UPS Rates and Services Guide, on the website of the consignor, which the consignee accessed to purchase the shipped goods.

[13] As originally proposed, certification of common issues #1 and #2 would have necessarily required a determination that the brokerage services provided by UPS were “unsolicited services” for the purposes of the Act. This follows from the fact that the common issues were proposed on the basis that the waybill or the IPSO constituted the entire contract between the consignor/consignee and UPS respecting shipping and brokerage services. Therefore, if the consignee had not agreed in the waybill or the IPSO to UPS performance of brokerage services for a fee to be paid by the consignee, the brokerage services were, by definition, “unsolicited services”.

[14] However, as certified, common issues #1 and #2(a) and (b) address the terms of the waybill and the IPSO without the express or implied approach that such contracts represent the totality of the agreement between the consignor/consignee and UPS respecting the shipping and brokerage arrangements.

[15] Accordingly, under the Order, common issue #2(c) embraces two principal issues: (1) what are the terms of the contract in its entirety between the consignor/consignee and UPS at the time of shipment and, in particular, do such terms provide for UPS to provide brokerage services and for the consignee to pay for such services?; and (2) if there is no agreement at the time of shipment to the performance of brokerages services and payment by the consignee of charges for such services, does such an agreement come into effect when the consignee agrees to pay the brokerage fees and charges “on the doorstep” upon delivery of the shipped goods?

[16] The issue for the court is whether leave to appeal should be granted in respect of the decision of the motion judge that the issues comprised in common issue #2(c) can be addressed as a common issue.

Preliminary Observations

[17] Before addressing this issue, I propose to address a number of other issues that have been raised by the parties that, in my opinion, are either not relevant to this issue or are not persuasive on this issue.

[18] First, as mentioned, the defendant submits that the motion judge erred in failing to follow the decisions of the courts of British Columbia in Blackman v. FedEx Trade Networks Transport & Brokerage (Canada), Inc. 2009 BCSC 201, [2009] B.C.J. No. 289 and MacFarlane v. United Postal Service Canada Ltd., 2009 BCSC 740, [2009] B.C.J. No. 1112, aff’d 2010 BCCA 171, [2010] B.C.J. No. 928.

[19] Insofar as these decisions are based on a conclusion of the trial judge in Blackman that a consignee is presumed to know that a shipper is required to clear customs if the consignee does not do so itself and therefore must be taken to have requested or authorized brokerage services necessary to import the shipped goods, this can be dealt with as a common issue. Such a presumption of law would operate in respect of all shippers. Insofar as these decisions are based on actual or deemed knowledge on the part of the consignee, I have addressed this issue below.

[20] Second, the defendant says that the case law in the commercial shipping field consistently holds that documents evidencing a shipping transaction are not determinative of the entire contract between the parties. While this is undoubtedly true in a large number of cases, it is possible that a shipper could create a contract that is limited to the express wording of the shipping document signed by the consignor. I do not find this issue to be persuasive on this motion.

[21] Third, as mentioned, the issue of whether the express language of the waybill incorporates the terms of the UPS Rates and Services Guide is a matter of contractual interpretation that is appropriately dealt with as a common issue.

[22] Fourth, the plaintiffs also plead that, if the shipping contract included a provision for brokerage services, it is a future performance agreement that does not comply with the regulations under the Act (common issue #6). This issue is entirely separate from the issue of whether the brokerage services are “unsolicited goods and services”. It presupposes that there is a finding that a binding contract exists for the performance of brokerage services and the payment of fees for such services. As mentioned, this issue is being adjourned at this time.

[23] Fifth, the plaintiffs also plead that the defendant’s refusal to release the shipped goods on the doorstep of a consignee, unless the brokerage fee and other charges are paid, contravenes s. 16 of the Act (common issue #4). This claim also presupposes that the brokerage services are not unsolicited goods or services. It is also not being dealt with at this time.

[24] Lastly, the defendant alleges that the motion judge erred in failing to consider the fact that the proper law of each shipping contract will be a law of a state of the United States, rather than Ontario. Even if this were true, which is by no means clear, that does not establish circumstances that will necessarily result in different contractual terms from one state to the next. There is no basis in the pleadings or the evidence for concluding that the law of contract differs in any respect that is material for present purposes. In particular, the argument that differing proper law of the shipping contracts will, by itself, result in differing terms regarding the incorporation of the Rates and Services Guide into the applicable shipping contract is highly speculative. I do not find it persuasive on this motion.

Analysis and Conclusions

[25] I turn then to the issue of whether the motion judge correctly certified, as a common issue, the question of whether the provision of brokerage services for a fee constitutes the provision of “unsolicited services” under the Act. As this is a leave motion, the issue for the court is whether either of the tests in rule 62.02(4) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, is satisfied in respect of the motion judge’s decision that this issue could be determined as a common issue.

[26] My answer to this question is informed by the following reality. As set out above, there are a number of different circumstances that could result in a finding that the consignee consented, or is deemed to have consented, to the performance of brokerage services by UPS and to payment for such services. Accordingly, the answer to the question of whether brokerage services constitute “unsolicited services” in any particular instance will depend upon the specific facts of the consignee’s knowledge of UPS’ intention to perform brokerage services for which it will charge brokerage fees and the extent to which the consignee agrees to pay, or acquiesces in the payment of, such fees in the face of such knowledge.

[27] I think it is clear from the Endorsement that the certification of common issue #2(c) is based on the conclusion of the motion judge that the consignee’s knowledge is not a relevant consideration for that issue. The motion judge concluded that actual knowledge of the consignee was inconsistent with the role of consumer legislation and, in particular, the Act. The motion judge was prepared to treat the Blackman and MacFarlane decisions as wrongly decided on this issue to the extent necessary.

[28] However, in my opinion, there are conflicting decisions on the issue of whether the consignee’s knowledge is relevant to a finding of whether the provision of brokerage services for a fee by UPS constitutes the provision of “unsolicited services” under s. 13 of the Act and good reason to conclude, on the basis of these decisions, that the consignee’s knowledge is relevant.

[29] I agree that the case law suggests that consumer knowledge is irrelevant in respect of other provisions of the Act, including in particular Part III which deals with unfair practices. However, there is reason to doubt the correctness of the motion judge’s conclusion that consumer knowledge is also irrelevant in respect of the provisions in s. 13 of the Act dealing with unsolicited goods or services. While s. 13(3) provides that a request for services shall not be inferred solely on the basis of payment, inaction or the passing of time, it clearly contemplates inferences being drawn in circumstances that include, but are not limited to, one or more of these actions on the part of the consignee. That is, s. 13 appears to contemplate a case-specific inquiry into whether the facts permit an inference that any particular consignee requested or authorized allegedly unsolicited goods or services.

[30] The case law provided to the court on this issue is, in my opinion, consistent with the conclusion that consumer knowledge from which a request or authorization can be inferred is a relevant consideration under s. 13 of the Act.

[31] In addition, although there is a factual basis for distinguishing the Blackman and MacFarlane decisions in the manner that the motion judge suggests, I think that, fundamentally, a conflict remains between these decisions and the Order. Notwithstanding the comments above concerning a possible reading of the ratio of these decisions based on a presumption of knowledge common to all shippers, I think the better reading of these cases is that, by virtue of the consignee’s actual knowledge, the consignee was treated as having requested or authorized brokerage services for which it was obligated to pay the UPS charges. While there are differences between the British Columbia statute at issue in Blackman and MacFarlane and the Act as the motion judge indicated, there is no evidence before the court of any material difference between these statutes in respect of the provisions regarding unsolicited goods and services under those statutes.

[32] Based on the foregoing, I conclude that there is good reason to doubt the correctness of the motion judge’s decision that the issues included in common issue #2(c) can be addressed by way of a common issue in this action. I am also of the opinion that the issue of the relevance of consumer knowledge to a determination regarding the provision of “unsolicited services” under s. 13 of the Act is a matter of public importance that warrants leave being granted. This issue is of significance in respect of many transactions that are subject to the Act beyond the shipping contracts at issue in this action.

[33] Accordingly, leave to appeal is granted. Costs of this motion are reserved for the court hearing the appeal.

Wilton-Siegel J.

Date: June 14, 2012