Wright v. United Parcel Service Canada Ltd., 2015 ONSC 2220

CITATION: Wright v. United Parcel Service Canada Ltd., 2015 ONSC 2220

DIVISIONAL COURT FILE NO.: 415/11
DATE: 20150519

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

SWINTON, HARVISON YOUNG AND LEDERER JJ.

BETWEEN:

RYAN WRIGHT AND JULIA ZISLIN Plaintiffs/Respondents

– and –

UNITED PARCEL SERVICE CANADA LTD. Defendant/Appellant

COUNSEL: Michael A. Eizenga, C. Scott Ritchie, Q.C. and Daniel Bach, for the Plaintiffs/Respondents John A. Campion, Robin Roddey and Sebastien Kwidzinski, for the Defendant/Appellant

HEARD at Toronto: March 17, 2015

Swinton J.:

Overview

[1] This appeal arises out of a class proceeding certified by Horkins J. (“the motions judge”) on August 26, 2011. The respondents, the representative plaintiffs in the action, allege various violations of the Consumer Protection Act,2002, S.O. 2002, c. 30, Sch. A (“CPA”) arising from practices of the appellant, United Parcel Service Canada Ltd. (“UPS”), in relation to international parcel shipping transactions. Among the issues raised in the proceeding is the allegation that UPS violated s. 13 of the CPA when it charged additional fees for brokerage services on delivery of imported packages, as the respondents claim that the brokerage services were “unsolicited services.”

[2] On June 14, 2012, Wilton Siegel J. granted leave to appeal part of the certification order - namely, that there was a common issue as to whether brokerage services were unsolicited. Accordingly, the only issue on this appeal is whether the motions judge erred in certifying, as a common issue, the question with respect to unsolicited services.

[3] In my view, the appeal should be dismissed, as the appellant has failed to identify any error of law or palpable and overriding error of fact on the part of the motions judge.

Factual Background

[4] UPS is an international courier that provides transportation and brokerage services. As a customs broker, it collects custom duties and HST in accordance with federal legislation when a shipment enters Canada from outside the country.

[5] As explained in the affidavit of Shelley Gares, Vice-President of Brokerage for UPS, primary UPS customers have customized contracts setting out specific rates, discounts, service charges and other terms. Those who do not have customized contracts “contract with UPS through waybills and ship at published rates under the published standard terms and conditions of service or tariff.” Ms. Gares describes such individuals as “typically infrequent or irregular shippers” (at para. 7).

[6] Ryan Wright and Julia Zislin, the representative plaintiffs in this proceeding, arranged for the shipment of parcels from the United States to their homes in Ontario. They and the other members of the class did not have customized contracts.

[7] Mr. Wright bought a pair of shoes from an eBay vendor in the United States. The vendor, acting as Mr. Wright’s agent, shipped the shoes to Mr. Wright in Canada via UPS, using the “standard service” level offered by UPS. Mr. Wright paid the vendor US$22 for shipping. UPS used a waybill to confirm the agreement to ship the shoes to Mr. Wright. The waybill did not contain a term regarding brokerage services or the payment of additional fees. Indeed, the waybill requires the shipper to select who will pay any “charges”. The selection allocates shipping, duty and V.A.T. among the shipper, recipient or third party. There is no box to check to demonstrate any agreement to pay additional fees, such as brokerage fees, and the waybill is marked “non-negotiable”. However, at the time of delivery, Mr. Wright was asked to pay $40.80, comprising $9.47 in government levies, $29.55 in “additional fees” (a brokerage fee, a disbursement or bond fee, and a C.O.D. fee), and $1.78 in GST on the brokerage fees. If he did not pay the charges, the shoes would not be released to him, and so he paid. Ultimately, the fee was reimbursed for reasons unrelated to this proceeding.

[8] Ms. Zislin asked her mother to ship her ski boots from the United States to Canada. Her mother paid US$19.23 for “standard shipping” to ship the boots, and the shipping was documented by an “international parcel shipping order” (“IPSO”). The IPSO did not contain a term regarding brokerage services or the payment of additional fees. The IPSO contains an entire agreement clause and “supersedes all prior/subsequent and/or contemporaneous representations, written or oral.” Again, upon delivery, UPS requested $49.10 from Ms. Zislin comprising government levies of $7.65, additional fees of $39.10 and GST on the additional fees of $2.35. Again, the boots would not have been released without payment of the fees, so Ms. Zislin paid the amount requested.

[9] The respondents do not take issue with their obligation to pay customs duties and HST on the content of the parcels. As well, they agree that the consignor acted as their agent, and they were bound by the terms of the agreement between their consignor and UPS. However, they do object to the payment of the additional fees for brokerage services charged by UPS for the movement of the imported goods through customs, as they did not request these services. In the rest of these reasons, I will refer to the fees for brokerage services, bond fees and C.O.D. fees as “additional fees.”

The Class Proceeding

[10] The certification order approved a class defined in the following terms:

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 date of the certification order].

[11] The motions judge found that the following causes of action pleaded by the respondents met the requirement of s. 5(1)(a) of the Class Proceedings Act, 1992, S.O. 1992, c. 6, as they were all viable causes of action (Reasons at para. 133):

(1) Unsolicited service: s. 13 CPA;

(2) False, misleading or deceptive representations: s. 14 CPA;

(3) Unconscionable representations: s. 15 CPA;

(4) Using custody of goods to “renegotiate” an arrangement: s. 16 CPA;

(5) Failure to meet the specific requirements for future performance agreements: s. 22 CPA;

(6) Violation of the criminal interest provisions of the Criminal Code; and

(7) Unjust enrichment.

[12] The motions judge certified nine common issues, including 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?

[13] Common issue 2(c) requires consideration of s. 13 of the CPA, which provides a consumer with a cause of action to recover an amount paid for unsolicited goods or services (see s. 13(8)). The term “unsolicited goods and services” is defined in s. 13(9):

(9) In this section,

“unsolicited goods or services” means,

(a) goods that are supplied to a consumer who did not request them but does not include,

(i) goods that the recipient knows or ought to know are intended for another person,

(ii) a change to periodically supplied goods, if the change in goods is not a material change, or

(iii) goods supplied under a written future performance agreement that provides for the periodic supply of goods to the recipient without further solicitation, or

(b) services that are supplied to a consumer who did not request them but does not include,

(i) services that were intended for another person from the time the recipient knew or ought to have known that they were so intended,

(ii) a change to ongoing or periodic services that are being supplied, if the change in the services is not a material change, or

(iii) services supplied under a written future performance agreement that provides for the ongoing or periodic supply of services to the recipient without further solicitation.

[14] Subsection 13(2) speaks to the obligation of a supplier, stating:

(2) No supplier shall demand payment or make any representation that suggests that a consumer is required to make payment in respect of any unsolicited goods or services despite their use, receipt, misuse, loss, damage or theft.

[15] Subsections (3) through (5) deal with the determination whether goods or services have been solicited. Notably, s. 13(3) provides:

(3) A request for goods or services shall not be inferred solely on the basis of payment, inaction or the passing of time.

Subsections (4) and (5) do not arise in the present proceeding, as they deal with a material change where a consumer is receiving goods or services on an ongoing basis.

[16] Subsections (6) through (8) deal with the consumer’s right to demand a refund and ultimately to bring an action to recover the payment.

[17] The motions judge found that the parties’ contract was co-extensive with the documentation provided to the consignor who arranged the shipping – either the waybill or the IPSO. She held that consumer knowledge is irrelevant in applying the CPA, and therefore, the CPA does not permit any inquiry into what the consumer knew in order to determine the terms of the contract. She stated (Reasons at para. 249):

The UPS argument that an individualized inquiry is required to determine the existence and terms of the contract cannot succeed for three reasons. First, it misses the point of this action. Second, it ignores UPS’s own evidence that it relied on the waybill. Third, and most important, the UPS position is at odds with both the language and purpose of the Consumer Protection Act.

She held that the essence of the claim was systemic in nature and grounded in the CPA, focusing on the system used by UPS and how customers were billed for the service. She held that UPS submitted evidence against its own argument that there must be an individualized inquiry, since the waybill and the IPSO were described as either “non-negotiable” or the “entire agreement” between the parties. Accordingly, it was not necessary to look at each class member’s individualized knowledge to determine the terms of the contract.

[18] The motions judge also found that the class proceeding was the preferable procedure and granted the certification order. At the same time, she granted partial summary judgment to the respondents on the unsolicited services issue. She also found that UPS failed to adhere to the statutory disclosure requirements in its contracts, that it used its custody and control of goods owned by the class members to force them to pay the additional fees and that it had made false, misleading or deceptive requirements, all contrary to the CPA.

[19] The appellant sought leave to appeal the certification order. Wilton-Siegel J. granted leave only with respect to common issue 2(c). The appellant also appealed the summary judgment determination to the Court of Appeal, including the unsolicited services aspect of the decision. That appeal has been stayed pending resolution of the current appeal.

The Issue on Appeal

[20] The only issue on this appeal is whether the motions judge erred in finding that question 2(c) was a common issue within the meaning of s. 5(1)(c) of the Class Proceedings Act.

The Standard of Review

[21] Certification decisions are entitled to deference by an appellate court. The court should interfere only if there is an error of legal principle or a palpable and overriding error of fact or mixed fact and law (Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC 57, [2013] 3 S.C.R. 477 at para. 111; Cassano v. Toronto-Dominion Bank, 2007 ONCA 781 at para. 23).

The Test for a Common Issue

[22] The Supreme Court of Canada has recently reaffirmed that the threshold to determine commonality is a “low one”. An issue is common if “its resolution is necessary to the resolution of each class member’s claims” (Vivendi Canada Inc. v. Dell’Aniello, 2014 SCC 1, [2014] 1 S.C.R. 3 at para. 72).

[23] However, the Supreme Court has emphasized that “[i]t is not essential that the class members be identically situated vis-à-vis the opposing party” (Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46, [2001] 2 S.C.R. 534 at para. 39). In Rumley v. British Columbia, 2001 SCC 69, [2001] 3 S.C.R. 184, the Supreme Court stated that a question could be common even if the answer would be nuanced to reflect individual claims (at para. 32). It reiterated this view in Vivendi (at para. 45):

A common question can exist even if the answer given to the question might vary from one member of the class to another. Thus, for a question to be common, success for one member of the class does not necessarily have to lead to success for all members. However, success for one member must not result in failure for another.

[24] The judge hearing the certification motion must only determine whether there is some basis in fact to support the conclusion that an issue is common to class members. It is not the role of the judge to enter into a consideration of the merits of the particular issue (Pro-Sys at paras. 99, 102).

The Appellant’s Argument

[25] The appellant submits that a court cannot determine whether brokerage services were unsolicited on a common basis. The motions judge is said to have erred in law when she held that the provisions of the CPA mandate that a court cannot look beyond the documentation exchanged between the parties in order to determine the services that the consumer has requested. Rather, the determination whether services were unsolicited requires a consideration of each transaction, including the knowledge of the consignor and the consignee about brokerage services and fees. If the consumer shared UPS’s intention to charge a fee for brokerage services (either personally or through his or her consignor as agent), the parties’ contract would include terms to this effect, and the services cannot be said to be unsolicited.

[26] The appellant supports this argument by pointing to s. 13(3) of the CPA, which states that “[a] request for goods or services shall not be inferred solely on the basis of payment, inaction or the passing of time” (emphasis added). The reference to “solely” implies that the act of payment is relevant to determining the consumer’s intention and, along with other indicia, may constitute evidence that the services were requested by the consumer.

[27] The appellant also relies on Blackman v. Fedex Trade Networks Transport & Brokerage (Canada), Inc., 2009 BCSC 201, which was followed in MacFarlane v. United Parcel Service Canada Ltd., 2009 BCSC 740, aff’d 2010 BCCA 171 and Leblanc v. United Parcel Service du Canada ltée, 2012 QCCS 4619. Garson J. in Blackman, after a summary trial, struck a proposed class action claiming that brokerage services were unsolicited services under the Business Practices and Consumer Protection Act, S.B.C. 2004, c. 2, s.12 (“BPCPA”). In reaching her decision, she considered the context of the transaction as a whole, including the plaintiff’s knowledge of customs brokerage fees, stating (at para. 56):

Mr. Blackman was aware through the Fedex Service Guide that the goods did have to clear customs and he must be presumed to know the law, which requires a courier of a shipment to clear it through customs if the owner does not present him or herself at the border. He was aware from the Fedex Service Guide, International Service Conditions that Fedex Ground may appoint and invoice a broker. (See Section A1. “Duties, taxes, and broker fees may be billed to the shipper …”; Section B “Fedex Ground does not provide this service but may assist in brokerage selection…”.) He may well have objection to the appointment of FTN as broker without his authority. He may well have objection to the amount of the brokerage fee he was charged. But I do not find that Mr. Blackman can say he did not request or authorize customs brokerage services necessary to import the shipment across the border. The services provided were essential to transport the shipment across the international border and cannot be construed as unsolicited services within the meaning of the BPCPA.

[28] In MacFarlane, the plaintiff in a proposed class proceeding also made various claims under the BPCPA. The British Columbia Court of Appeal held that the plaintiff had no cause of action, given the earlier holding in Blackman.

[29] Leblanc, a Quebec case, agreed with the conclusion in Blackman (at para. 225) and found that the performance of customs brokerage services was an implied term of the contracts of transport (at para. 227).

Did the Motions Judge Err?

[30] In my view, the motions judge made no error in law in finding question 2(c) to be a common issue. She correctly set out the applicable legal principles governing the determination of common issues at paras. 198 to 204 of her reasons.

[31] She then considered the pleadings, the evidence and s. 13 of the CPA and concluded that there was a common issue with respect to unsolicited services. That conclusion was one of mixed fact and law, and it is deserving of deference. Absent some palpable and overriding error, this Court should not interfere with the motions judge’s determination. In my view, UPS has not shown any such error.

[32] UPS argues that the unsolicited services issue requires an individualized inquiry into the knowledge of the consignor. However, the argument misconceives the claim made by the respondents. Their claim is systemic in nature, focusing on the conduct of UPS and its compliance with the CPA. It is grounded in the fact that UPS used standard form contracts (the waybill and the IPSO) in dealing with customers who did not have customized contracts. Those contracts were either “non-negotiable” or the “entire agreement” between the parties, and they did not contain a term for the provision of brokerage services or the payment of additional fees for brokerage services. Therefore, in determining the merits of the claim, the focus will not be on the knowledge of the consignor at the time of entering into the contract, given the express terms of the contract.

[33] UPS argues that there must still be an individual inquiry into the knowledge of the consignee. It is not altogether clear what UPS is arguing here. On the one hand, UPS seems to argue that a consignee who paid for brokerage services on other shipments could be said to share the intent of UPS to collect fees for brokerage services, and thus the obligation to pay fees is part of the contract. Alternatively, the argument is that the knowledge of the consumer and subsequent payment can constitute a request for the brokerage services. UPS asserts that the inquiry requires consideration not only of the terms of the contract, but also the knowledge and actions of each individual - an inquiry that is highly individualistic in nature.

[34] There are three problems with this argument. First, to the extent that UPS seeks to read terms into the contract based on the consumer’s information, the waybill and IPSO preclude such reading in. Moreover, evidence of subjective intention is not admissible to interpret the terms of the written contract, absent some ambiguity. UPS has pointed to no ambiguity in the contract.

[35] Second, to the extent that UPS argues that the focus should be on the conduct of the consignee in requesting the services, a “request” would arguably require both knowledge of the services and consent by the consumer to pay for them. The respondents argue that the structure of the CPA requires disclosure of the fees for brokerage services and the consumer’s agreement to pay for them. This would be consistent with the remedial purpose of the CPA and applicable provisions of the CPA dealing with disclosure (see ss. 5 and 22 of the CPA and s. 24(6) of O. Reg. 17/05). Payment alone is not sufficient to show the services were solicited (see s. 13(4) of the CPA). Whether the respondents are correct in their interpretation of the obligations under the CPA and the impact on s. 13(9) is an issue that can be determined in common.

[36] Third, there was evidence from the two respondents that they did not ask UPS to perform the brokerage services for them, and UPS did not disclose the existence of the brokerage services or the additional fees which include the fee for those services. They were told on delivery that they could not receive their parcels without paying the additional fees, and UPS employees followed a common practice on delivery of demanding payment of the brokerage fees before the release of the parcels, as set out in Ms. Gares’ affidavit. In the circumstances, there was some basis in fact to support the conclusion that the services were unsolicited by the representative plaintiffs, and question 2(c) could be determined on a common basis.

[37] Even if UPS is correct in arguing that there could be different responses to the question whether a consignee requested the brokerage services, the answer to a common issue need not be the same for every class member, as the Supreme Court has said numerous times, most recently in Vivendi. In effect, UPS’s argument asserts that the answer to the common issue may be nuanced. However, that does not preclude certification, as an issue can be common even if the answer might vary from one class member to another.

[38] In my view, the motions judge correctly held that the British Columbia decisions in Blackman and MacFarlane were not binding on her and could be distinguished. Blackman arose in the context of a customized account held by the consignor, not a standard form contract that contains no reference to brokerage services and additional fees. Garson J. held that the consignee was aware of the terms relating to customs dues and brokerage fees, given the knowledge of the consignor.

[39] In contrast, the contracts in the present case are standard form, not customized. To the extent that Garson J. relied on the consignor’s knowledge as an account holder to support the conclusion that the consignee agreed to the brokerage services and the payment, that conclusion does not assist in the present case, given the terms of the UPS standard form contracts. Moreover, there is reason to doubt the correctness of the Blackman decision, given the failure to consider the importance of reading consumer protection legislation generously to protect the consumer, as the Supreme Court of Canada stated in Seidel v. TELUS Communications Inc., 2011 SCC 15 at para. 37.

[40] To the extent that UPS argues that a term for the payment of brokerage services should be implied, as in Leblanc, I note that the conclusion in Leblanc rests on the presumed legal knowledge of the consignee of the need for the shipper to clear customs on importing the parcel and the implied request for the brokerage services to facilitate the entry of the goods to Canada. Whether such a term can be implied in the contracts in issue here, given the terms of the documents and the various provisions of the Ontario legislation, including the obligation to disclose brokerage fees, is an issue that can be determined on a common basis. It is not an issue that should be determined in the course of the certification motion, where the judge’s role is not to determine the merits.

[41] In my view, UPS has failed to establish any error by the motions judge. There was a basis in fact to certify a common issue of whether, in light of the standard form contracts and UPS’s systemic practice, UPS provided unsolicited services under s. 13 of the CPA.

Conclusion

[42] Accordingly, the appeal is dismissed. If the parties cannot agree on costs, they may make brief written submissions through the Divisional Court office within 21 days of the release of this decision.

___________________________ Swinton J.

Harvison Young J.

Lederer J.

Released: May 19, 2015

CITATION: Wright v. United Parcel Service Canada Ltd., 2015 ONSC 2220

DIVISIONAL COURT FILE NO.: 415/11
DATE: 20150519

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

SWINTON, HARVISON YOUNG AND LEDERER JJ.

BETWEEN:

RYAN WRIGHT AND JULIA ZISLIN Plaintiffs/Respondents

– and –

UNITED PARCEL SERVICE CANADA LTD. Defendant/Appellant

REASONS FOR JUDGMENT

Swinton J.

Released: May 19, 2015