COURT OF APPEAL FOR ONTARIO
CITATION: Ramdath v. George Brown College of Applied Arts and Technology, 2015 ONCA 921
DATE: 20151224
DOCKET: C59349
Feldman, Cronk and Huscroft JJ.A.
BETWEEN
Katrina Ramdath, Zsolt Kovessy and Ashish Singh
Plaintiff (Appellants/
Respondents by way of cross-appeal)
and
The George Brown College of Applied Arts and Technology
Defendant (Respondent/
Appellant by way of cross-appeal)
Won J. Kim and Aris Gyamfi, for the appellants/respondents by way of cross-appeal
Robert B. Bell, Michael C. Smith and Jonathan Chen, for the respondent/appellant by way of cross-appeal
Heard: May 7, 2015
On appeal from the order of Justice Edward P. Belobaba of the Superior Court of Justice, dated June 25 and August 8, 2014, with reasons reported at 2014 ONSC 3066 and 2014 ONSC 4215.
Feldman J.A.:
Introduction
[1] This appeal tests the interaction between class actions and consumer protection legislation, and the ability to award aggregate damages to a class with a consumer protection claim
[2] The appellants are students who enrolled in a post-graduate program in International Business Management at George Brown College (“GBC”) in 2007 and 2008. They commenced a class action against GBC for negligent misrepresentation, breach of contract and unfair practice under the Consumer Protection Act, 2002, S.O. 2002, c. 30, Sch. A. The action was based on the misleading statement in GBC’s course calendar that program graduates would have “the opportunity to complete three industry designations/certifications” in addition to the GBC graduate certificate. In fact, students were required to complete additional courses, and/or work experience as well as exams at their own expense, in order to fulfill the requirements for the industry designations.
[3] The class action has proceeded in stages. First, the class action was certified. Then a common issues trial was held where the court found that the course calendar statement was a negligent misrepresentation and a breach of the unfair practices provision of the Consumer Protection Act. That decision was appealed to this court and upheld. The next stage was the damages trial. At that trial, the court awarded aggregate damages for the statutory cause of action, but removed one cohort of students from the certified class. The appellants appeal the change to the class composition and the respondent cross-appeals the aggregate damages award.
[4] This was the first award of aggregate damages at trial under s. 24 of the Class Proceedings Act, 1992, S.O. 1992, c. 6 in an Ontario class action, and the propriety of the award is strongly disputed. For the reasons set out below, I would uphold the aggregate damages award. I would also restore the third cohort of students to the certified class, but refer the issue of their damages back to the trial judge.
Facts and judicial history
[5] The named plaintiffs represent three cohorts of students who registered at GBC for the 8-month post-graduate program in International Business Management. The students began the program in September 2007 (the first cohort), in January 2008 (the second cohort) and in September 2008 (the third cohort).
[6] The course calendar for the 2007-8 and 2008-9 academic terms contained the following description of the program:
The International Business Management post-graduate program provides students with the opportunity to complete three industry designations/certifications in addition to the George Brown College Graduate Certificate.
[7] In fact, in order to obtain the three industry designations following graduation, students were required to take additional courses and/or obtain work experience and write exams, all at additional expense.
[8] The trial judge found at the common issues trial that when the students discovered this, they were very disappointed. They would have had a much better chance of obtaining a job in international business management with the industry designations. They said that they could not afford the additional time and expense to pursue the accreditations on their own. The evidence of the three representative plaintiffs was that they already had post-secondary educational accreditations, and they took the program to have the opportunity to complete the industry designations.
[9] Upon learning that they would not be receiving the industry designations, students in the second cohort made a group complaint to the program advisor at a meeting on July 23, 2008. Following the meeting, GBC quickly changed the on-line version of the calendar to remove the impugned information. While the revised on-line version was effective from July 30, 2008, the hard copy of the calendar was not corrected and reprinted until later.
[10] Students in the first and second cohorts also filed a written complaint with the GBC administration on August 1, 2008. In response, GBC took the position that the calendar was neither inaccurate nor misleading. Nevertheless, GBC proceeded to obtain some accommodation in cost from at least one of the industry designating bodies for the affected students to be able to obtain their industry designations.
[11] In early October 2008, the plaintiffs brought a class action against GBC claiming three causes of action in relation to the course calendar statement: negligent misrepresentation, breach of contract and unfair practice under the Consumer Protection Act.
[12] A certification hearing was held before Strathy J., as he then was. He certified the action as a class proceeding in 2010. The class was defined to include all the students, two-thirds of whom were foreign students, who had registered in the program in one of the three cohorts covered by the statement of claim. The certification judge certified common issues relating to each of the three causes of action but declined to certify the proposed common issues on damages: see 2010 ONSC 2019, at paras. 114-121.
[13] The common issues trial proceeded before the trial judge in 2012: see 2012 ONSC 6173. The evidence consisted only of affidavits and read-ins. The trial judge found that the plaintiffs had proved both the statutory unfair practice claim and the common elements of the negligent misrepresentation claim.
[14] At that stage, the trial judge made a number of findings of fact and mixed fact and law that were necessary to decide the common issues of liability.
[15] First, he decided the meaning of the impugned representation in the course calendar. This was important for the damages trial because it determined the extent of what was promised and not delivered by GBC.
[16] Based on an analysis of the evidence regarding the full relevant content of the calendar, together with the evidence from the students and from the program advisor, the trial judge concluded that the impugned representation meant that the students would have the opportunity, during the program, to complete all the requirements for the industry designations. However, they would still have to pay for and pass the industry final exams and pay the applicable annual membership fees. He based this conclusion in part on the “admission requirements” for the program, which stated that the tuition fee for the program did not include the cost of association memberships or examinations. That suggested that such memberships and examinations would have to be taken and paid for separately.
[17] Second, the trial judge determined that the students were “consumers” within the meaning of the Consumer Protection Act.
[18] He then turned to the nine common issues that had been certified. In relation to the Consumer Protection Act claim, which is the only claim relevant to this appeal, the trial judge found, first, that GBC had engaged in an “unfair practice” under s. 14(1) of the Consumer Protection Act by making a “false, misleading or deceptive representation;” and, second, that the class members were entitled to a remedy under s. 18 of the Consumer Protection Act. In particular, he stated at para. 77, tracking the language of s. 18(2):
[77] Because rescission is no longer possible, the class members are entitled to recover the amount by which the student’s payment under the agreement with GBC exceeded the value of the Program provided, or to recover damages, or both.
[19] He also observed: 1) the Consumer Protection Act does not require proof of reliance or inducement, as long as the students entered into the consumer transaction after the unfair practice occurred; and 2) because rescission was no longer possible, monetary compensation was the remedy. The quantum of the compensation would be determined at the damages trial.
[20] The common issues decision was appealed to this court, which upheld the decision of the trial judge: see 2013 ONCA 468. Concerning reliance, this court explained, at para. 15:
[W]e do not view the [Consumer Protection Act] as requiring proof of reliance in order to establish that there has been an unfair practice and that there is entitlement to a remedy under the Act. Section 18(1) of the [Consumer Protection Act] clearly provides that a consumer who enters into an agreement “after or while a person has engaged in an unfair practice” is entitled to any remedy that is available in law, including damages. Proof of reliance is not a prerequisite.
Despite this clear statement, reliance continued to be an issue as the proceeding progressed, including on this appeal.
[21] The next stage was the damages trial, the subject of this appeal. The main issue before the trial judge was whether and to what extent the class should be awarded aggregate damages under s. 24(1) of the Class Proceedings Act. However, before conducting that analysis, the trial judge addressed a number of preliminary matters that would affect the entitlement to and calculation of damages. The findings on some of those issues are part of the subject of this appeal and cross-appeal.
[22] The first issue raised by GBC was, again, the role of reliance, this time in the context of proof of causation of the damages claimed for an unfair practice under the Consumer Protection Act. The entitlement to damages under the Act is provided in s. 18(1) and (2):
- (1) Any agreement, whether written, oral or implied, entered into by a consumer after or while a person has engaged in an unfair practice may be rescinded by the consumer and the consumer is entitled to any remedy that is available in law, including damages.
(2) A consumer is entitled to recover the amount by which the consumer’s payment under the agreement exceeds the value that the goods or services have to the consumer or to recover damages, or both, if rescission of the agreement under subsection (1) is not possible,
(a) because the return or restitution of the goods or services is no longer possible; or
(b) because rescission would deprive a third party of a right in the subject-matter of the agreement that the third party has acquired in good faith and for value.
[23] The trial judge reiterated that a student who entered into an agreement with GBC and enrolled in the program after the unfair practice occurred is entitled to damages, whether or not the student relied on the representation or was induced by it to enter into the agreement: “In other words, even class members who never read or relied on the misrepresentation in the GBC course calendars would still be entitled to a damages remedy” (para. 16).
[24] GBC’s position was that, nevertheless, s. 18(2) did not vitiate the need to establish causation in order to prove damages and that causation could only be proved on an individual basis, linked back to individual reliance on the misrepresentation. This was the theme of GBC’s entire position both at the damages trial and on this appeal: damages can only be assessed on an individual basis and cannot be aggregated.
[25] Without deciding whether proof of causation was necessary, as GBC argued, the trial judge found that a sufficient causal connection for the purposes of s. 18(2) had already been established and was contained in three findings from his common issues decision and from the appeal decision:
It was the opportunity to obtain the three industry designations and not the program itself that initially attracted the plaintiffs to GBC;
The plaintiffs claim they would not have enrolled in the program but for the representation about the industry designations. For the representative plaintiffs and for the students they represent, the value of the program was the opportunity to obtain the three designations in addition to the GBC graduate certificate;
The promise of the three industry designations made the program very attractive to prospective students.
[26] The trial judge added that, from a common sense point of view, students applying for an eight month graduate course, especially if they are coming from foreign countries, would “most likely review the program description before applying and paying a substantial tuition” (para. 19). He concluded that if causation were necessary, it had been established for the class.
[27] He then turned to the measure of damages. Both sides had agreed that damages should be assessed by the tort measure: putting the students into the position they would have been in had the wrong not been committed. The parties also agreed on a damages formula to determine the amount of compensation owed to the students: direct costs plus indirect costs minus residual value. Direct costs would be reasonably foreseeable expenses the students incurred to take the program, including tuition and books, plus travel costs for foreign students. Indirect costs would include lost income during the course and costs caused by delayed entry into the marketplace. The residual value of the program, deducted to prevent over-compensation, would be the value of the GBC graduate certificate without the three industry designations.
[28] Finally, before turning to the issue of aggregate damages, the trial judge determined two issues regarding the composition of the class that had been raised by GBC at the common issues trial and deferred to the damages trial.
[29] The first was whether the students who did not complete the course and either dropped out or failed should still be included in the class and entitled to damages. The trial judge found that they were still victims of the unfair practice and therefore still part of the class, but they may have suffered a different quantum of damages than students who graduated from the program.
[30] The second was whether the third cohort – the students who began the program in September 2008 – should remain as part of the class. The trial judge found that the program advisor, Professor Kohli, had orally advised this cohort at the beginning of the term about the correction to the course calendar regarding the opportunity to obtain the industry designations. During this window at the start of classes, students were able to withdraw from the program and receive a refund of tuition. Therefore, the trial judge concluded, the students in the third cohort who continued with the program were not victims of the unfair practice and were not entitled to a remedy under s. 18(2). It is that finding that is the sole issue on the main appeal. I will turn to that issue now.
The appeal: Did the trial judge err by excluding the third cohort from the certified class?
[31] In my view, the trial judge made a number of errors of law as well as a palpable and overriding error of fact which undermine his analysis of this issue.
[32] In approaching the issue, the trial judge noted that when the certification judge included the third cohort in the class, he had assumed that some of the students in the third cohort relied on the uncorrected print version of the calendar when they applied to the program in the spring and summer of 2008. The trial judge then identified his task to be to determine whether that assumption was valid.
[33] In fact, whether the certification judge’s assumption was valid was irrelevant to the damages trial. When the certification judge referred to reliance in his 2010 decision that decided the composition of the class, he was considering three claims by the plaintiffs. One of those claims was negligent misrepresentation, where reasonable reliance is an element of the cause of action: Queen v. Cognos Inc., 1993 146 (SCC), [1993] 1 S.C.R. 87, at p. 110. Following certification, in the common issues trial, the trial judge determined, this court agreed, and the trial judge restated in the damages decision, that it is not necessary to prove reliance in order to establish an unfair practice claim under the Consumer Protection Act. Therefore, once the plaintiffs elected to pursue only their Consumer Protection Act claim at the damages trial, reliance on the misrepresentation was no longer in issue.
[34] Despite this, the trial judge moved on to discuss the evidence of the third cohort’s reliance on the misrepresentation. He stated that GBC had corrected its website calendar “before the third cohort entered into their agreements with GBC and paid their tuition for the program that began in September, 2008” (at para. 33; emphasis in original).
[35] This was an error. All but four of the students who applied to the program had applied while the original website representation was in place. The record discloses that many of these students had enrolled and paid tuition before the correction to the calendar. Even for the four students who applied after the website correction, the printed version of the course calendar still contained the misrepresentation when they applied. There is no suggestion in the record that any one of the students who commenced the program in September 2008 had not entered into an agreement with GBC and made some payment toward tuition.
[36] In short, all students in the third cohort were subject to the unfair practice and entitled to a remedy under the Act.
[37] The trial judge next accepted the affidavit evidence given by Professor Kohli that he met with the third cohort in the first two weeks of their program, within the 10-day course withdrawal period, and orally corrected the requirements to obtain the industry designations. Contrary to the appellants’ submission, he was clearly entitled to do so. The trial judge explained why he had rejected Professor Kohli’s same affidavit evidence at the common issues trial as it applied to a similar meeting he claimed to have had with the first two cohorts. The trial judge explained that he had previously rejected Professor Kohli’s evidence that he had orally corrected the error in the course calendar to the first two cohorts because there was evidence to the contrary that was supported by events. In contrast, the trial judge accepted the professor’s evidence that he corrected the error for the third cohort in September 2008 for a number of reasons: first, his statement was uncontradicted by any student who was there; second, it made sense that he did so in September following the complaint by the first two cohorts and the website correction; and third, there were no complaints about the error from any member of the third cohort, as there had been from the other two.
[38] Based on his finding that GBC orally corrected the misrepresentation that was still in the printed course calendar to the students in the third cohort, the trial judge concluded, at para. 37, that the third cohort should be excluded from the class:
Having heard this correction, the third cohort students who may have applied on the basis of the misrepresentation in the printed course calendars had the opportunity to withdraw within the ten-day withdrawal period and get a full refund of their tuition. Those that remained in the Program, having heard the correction, cannot fairly be described as the victims of an unfair practice. The third cohort class members are therefore not entitled to a section 18(2) damages remedy.
[39] In my view, this conclusion must be set aside. To the extent the conclusion suggests that the students were only subject to an unfair practice because they relied on the misrepresentation, it is an error of law to exclude the third cohort from the class on that basis. As indicated above, a claim under the Consumer Protection Act based on an agreement entered into following an unfair practice does not require any reliance on or even knowledge of the unfair practice: see also Matoni v. C.B.S. Interactive Multimedia Inc. (Canadian Business College), 2008 1539 (Ont. S.C.) at para. 149, in addition to para. 15 of the common issues appeal reasons, para. 79 of the common issues trial reasons, and para. 109 of the certification reasons.
[40] Alternatively, if the trial judge is saying that the unfair practice was effectively nullified for the third cohort by the professor’s oral correction, that oral correction came too late to have any legal effect. Because the students entered into their agreements with GBC after the unfair practice occurred and before the correction, their claim under the Consumer Protection Act had already crystallized.
[41] Finally, the trial judge’s conclusion suggests that the third cohort had the opportunity to withdraw from the course and obtain a full refund during a 10-day withdrawal period offered by GBC, and not having done so, they cannot claim to be victims of an unfair practice. This raises the issues of rescission and reduction of loss.
[42] Dealing first with rescission. The trial judge erred by saying that students could withdraw during the 10-day period and obtain a full refund. In fact, foreign students were required to forfeit a $500 administration fee upon withdrawal while domestic students were subject to a $100 administration fee. More significantly, however, his suggestion is not consistent with the damages formula that was agreed upon by the parties and accepted by the trial judge. That formula anticipates that a student who is entitled to be made whole in respect of the unfair practice will be reimbursed not only for tuition, but for other out-of-pocket expenses such as textbooks and travel costs.
[43] Nor would withdrawing from the course necessarily be the best way for students to reduce their loss at that point in time. Another and arguably better approach would have been to proceed with and complete the program, then attempt to obtain one or more of the industry designations. In fact, the chart prepared by GBC that describes all the cohorts, and that is reproduced by the trial judge at para. 30 of his reasons, shows that all students in the third cohort who graduated from the program went on to obtain at least one of the industry designations. Though the trial judge found that the industry designations had little value for entry-level job seekers, the fact that these students chose to obtain an industry designation suggests that the value of the program to them may be considerably higher than to students in the first two cohorts.
[44] In summary, in my view, the trial judge erred in law by finding that the third cohort is excluded from the class and not entitled to damages under s. 18(2) of the Consumer Protection Act. Like the other cohorts, the third cohort entered into agreements with GBC following an unfair practice. To the extent that the misrepresentation in the course calendar was orally corrected by Professor Kohli, that correction, coming when it did, had no legal effect on the Consumer Protection Act claim.
[45] Furthermore, a consequential effect of excluding the third cohort from the class was that it would have prevented them from pursuing damages on an individual basis, which the trial judge observed was an option left open in the plaintiffs’ most recent litigation plan (damages reasons, at para. 50).
[46] Having found that the third cohort remains part of the class, I will defer the issue of their damages until I have addressed the cross-appeal on the issue of aggregate damages.
The cross-appeal: Did the trial judge err in his award of aggregate damages?
[47] I have already outlined some of the facts and findings of the trial judge at the damages trial. In order to address the issues raised by GBC on the cross-appeal, it is necessary to focus on a number of his key findings on aggregate damages.
[48] The plaintiffs entered the damages phase of the proceeding on the basis of a strategic decision to proceed only on the Consumer Protection Act claim for damages under s. 18(2), and to claim aggregate damages based on the unfair practice, which did not require proof of reliance by any of the class members. GBC’s position was, nevertheless, that those damages could still only be assessed on an individual basis, and that they were dependent on individual causation, mitigation and individual expenditures for the direct costs of taking the program.
[49] The trial judge, an experienced class action judge, commenced his reasons by disclosing his approach, which was that “aggregate damages are essential to the continuing viability of the class action” and “should be more the routine than the exception” in order to realize the potential for the class action to enhance access to justice (at para. 1).
[50] He referred to s. 24(1)(c) of the Class Proceedings Act,which provides:
The court may determine the aggregate or a part of a defendant’s liability to class members and give judgment accordingly where, …
(c) the aggregate or a part of the defendant’s liability to some or all class members can reasonably be determined without proof by individual class members.
[51] He pointed out that s. 24(1)(c) requires only that all or part of a defendant’s monetary liability be able to be reasonably determined without proof by individual class members. The same degree of accuracy as in an ordinary action is not required. Therefore, the aggregate damages methodology will be reasonable if some members of the class are over-compensated and some are under-compensated, as long as the defendant’s total liability is not over-stated.
[52] On the key issue of the type of evidence a court should require in order to make an aggregate assessment, the trial judge suggested the following overarching proposition, at para. 46:
The court may award aggregate damages under s. 24(1)(c) of the CPA if the evidence put forward by class counsel is sufficiently reliable to permit a just determination of all or part of the defendant’s monetary liability without proof by individual class members.
[53] Because the plaintiffs had decided to pursue an aggregate damages claim, the trial judge denied GBC the opportunity to examine for discovery the individual members of the class, ruling that such discovery was premature. The plaintiffs proposed that aggregate damages could be assessed by dividing the class into three groups: the international students who graduated from the program; the domestic students who graduated from the program; and the students who did not graduate. The trial judge accepted that the students who did not graduate were entitled to recover the same direct costs as those who completed the program but held that if any of them had received any refund of tuition, the amount of the refund would be deducted from the award to any such student, in order to prevent double recovery.
[54] Both sides presented expert evidence on whether aggregate damages could or should be awarded. The plaintiffs’ expert was Dr. Charette, a labour economist and professor at the University of Windsor, whose reports set out a methodology for assessing aggregate damages. GBC’s expert was Dr. Becker, an American economic consultant, who was critical of Dr. Charette’s analysis and urged individual assessments.
[55] GBC moved to exclude Dr. Charette’s evidence as not meeting the criteria for the admission of expert evidence set out in R. v. Mohan, 1994 80 (SCC), [1994] 2 S.C.R. 9, and as flawed, unscientific and unreliable. The trial judge found that he did not have to decide the motion because he did not rely on any of the impugned analytic portions of Dr. Charette’s evidence.
[56] The trial judge then turned to the agreed formula to assess damages (direct costs plus foregone income and the cost of delayed entry into the workforce minus residual value) and whether the evidence led to prove the components of the formula was sufficiently reliable to allow a just determination of GBC’s liability without proof of individual loss.
[57] The first component of the formula was direct costs, which he defined as the reasonably foreseeable out-of-pocket expenses incurred by class members, including tuition and books and supplies, along with extraordinary living expenses associated with the program and return air fare costs for foreign students. The trial judge noted that requiring individual proof was not practical given the passage of seven years and the unlikelihood that the students would have retained receipts. He then turned to the reliability of the information that was presented to the court.
[58] The trial judge identified the following three subcategories where the evidence of quantum was not in dispute: 1) application, administration and tuition fees; 2) student association fees; and 3) health and medical insurance fees for foreign students. He was also able to find sufficiently reliable evidence to substantiate the costs of textbooks and supplies and for the costs of air travel of foreign students.
[59] For the textbooks and supplies costs, the trial judge estimated an average cost per student of $400. To do so, he referred to three indicators: the mid-point of the cost range for text books of $900 that was suggested by GBC in its Guide for International Students, the fact that Ms. Ramdath had paid $500 for her new books and supplies, and the fact that some students purchase used textbooks. As GBC offered no evidence on the point and because the amount arrived at was less than half the average cost suggested by GBC in its own Guide for International Students, the trial judge found it reasonable to fix that cost at $400.
[60] For the costs of air travel for foreign students, the trial judge used a weighted average of the round-trip economy fares from the capital cities of the 14 countries of origin of the foreign students in the class, based on data taken from Expedia and Tripadvisor, two internet travel services. The trial judge noted that GBC objected to the accuracy of the data but offered no evidence to the contrary. GBC also suggested that some of the foreign students did not return to their home countries, but it presented neither any evidence of how their student visas could have been changed nor any information as to how many remained in Canada.
[61] The trial judge concluded that the evidence for each of these five categories of costs was sufficiently reliable to permit a just determination of GBC’s liability for those costs without the necessity of individualized evidence.
[62] In contrast, he was unable to come to the same conclusion about other direct costs, such as living expenses, and about the indirect costs. He rejected the additional direct costs claims because the amounts were either not proved or not properly associated with enrolment in the program. Concerning indirect costs, the trial judge rejected the methodology for assessing foregone income and the cost of delayed workplace entry suggested by Dr. Charette, finding it to be based on unreliable assumptions that would result in an unjust determination of GBC’s aggregate liability.
[63] The last component of the agreed damages formula was the deduction of the residual value of the program, if it could be reasonably determined on an aggregate basis without proof from the individuals in the class. To do that, the trial judge accepted and relied on the evidence led by GBC from its witness, Mr. Trevor Stewart, an experienced recruiter and job placement specialist.
[64] Mr. Stewart surprised the court when he testified that the three industry designations had no value for entry-level job seekers in the trade area.
[65] Based on that evidence, the trial judge concluded that the original premise that he and the certification judge had initially accepted - that the value of the course to each student would depend on the student’s individual career goals and the use of the designations for those individual goals - no longer applied. Nor was mitigation of loss by seeking the designations at a later date relevant if the designations had no value. Rather, the residual value was measurable by the job market value of the program alone without the industry designations, which was particularly applicable to a course that was intended to lead to an entry-level job.
[66] GBC argued that because the industry designations added no value, the program was worth 100 percent of its cost even without the opportunity to obtain the designations.
[67] The trial judge concluded that the key point for determining the market value of the program was whether the GBC certificate leads to actual jobs in the international business area. He rejected the usefulness of the survey evidence that was presented by GBC from students who were very content with the course. He also rejected as unpersuasive the fact that the program remains oversubscribed without the designations, because subscription does not translate into jobs.
[68] He accepted the evidence of GBC’s witness, Mr. Stewart, that entry level job applicants are measured primarily not by any accreditations or designations they have earned but by their personal attributes, their activities and leadership skills. Mr. Stewart acknowledged some value to the certificate, as with any educational degree or diploma, in demonstrating a commitment to education and the ability to actually complete a program. As well, the GBC program provided students with a knowledge base and a baseline level of competency.
[69] Applying this evidence to the class, the trial judge observed that 80 percent of students could already show commitment to education because they had a university or college degree before commencing the GBC program, while those who did not get jobs in the area did not benefit from the knowledge base. However, he rejected the plaintiffs’ submission that the program had no measurable market value and therefore no residual value, because of the benefit to members of the class for whom this was their only diploma and for those who did obtain a job in the field. He concluded that the residual value was within a range of 15 to 20 percent of the cost of the program, but allowed both parties the opportunity to make further written submissions.
[70] Following receipt of those submissions, the trial judge issued an addendum to his reasons: see 2014 ONSC 4215. In their supplementary submissions, the plaintiffs continued to argue that the residual value of the program was nothing, or at most, 10 percent, and that any residual value should be deducted only from the class members who did not have a previous degree. GBC maintained its position that the residual value of the program was 100 percent.
[71] After considering the further submissions and reassessing the evidence in light of those submissions, the trial judge concluded that the residual value of the program was not 15 to 20 percent but 10 percent. He observed, at para. 7 of the addendum, that this was his best estimate based on the evidence, and that the quality of the evidence and the lack of evidence from GBC made the task “somewhat frustrating.”
[72] However, because he wanted to err in favour of GBC, his ultimate finding was that the residual value of the program without the three industry designations was “about 15%”.
Issues raised on the cross-appeal
[73] GBC raises five issues, which I will set out in full and which I will address. However, the overall effect of the cross-appeal is to challenge the entire basis on which the trial judge proceeded to assess damages on an aggregate basis and to maintain the position it has taken throughout, which is that damages can only be assessed on an individual basis. As such, I will first address the trial judge’s general approach to the aggregate damages award under the Consumer Protection Act,before addressing the individual issues raised by GBC.
[74] The five issues raised by GBC are as follows:
a) The trial judge erred in law by permitting students who failed and did not successfully complete the B411 Program to remain members of the class.
b) The trial judge erred in law by determining aggregate damages based on proof from a select few individual class members. Individual evidence could not in law be taken as representative for all class members.
c) The trial judge erred in law by basing the “net” aggregate award on an unfair practice that was transformed from the finding at the common issues trial as ‘opportunity to complete some of the requirements of the three industry designations’ to a requirement that the Program was to “lead to actual jobs in the international business area”.
d) The trial judge erred in law by refusing to rule on admissibility of the expert testimony of Dr. Charette, finding that such testimony was not necessary to the determination of the aggregate damages issue, and then in the Judgments relied upon evidence of Dr. Charette in determining aggregate damages, while ignoring the expert evidence of Dr. Becker.
e) The trial judge erred by eliminating or reversing the plaintiffs’ onus to prove damages caused by the defendant's unfair practice while at the same time denying George Brown any right to discovery.
[GBC cross-appeal factum, at para. 25.]
Aggregate Damages
[75] Section 24(1) of the Class Proceedings Act is the section that allows the court to assess and award aggregate damages where the conditions set out in subsections (a), (b) and (c) are met. The section provides:
- (1) The court may determine the aggregate or a part of a defendant’s liability to class members and give judgment accordingly where,
(a) monetary relief is claimed on behalf of some or all class members;
(b) no questions of fact or law other than those relating to the assessment of monetary relief remain to be determined in order to establish the amount of the defendant’s monetary liability;
(c) the aggregate or a part of the defendant’s liability to some or all class members can reasonably be determined without proof by individual class members.
[76] I endorse the trial judge’s view that it is desirable to award aggregate damages where the criteria under s. 24(1) are met in order to make the class action an effective instrument to provide access to justice. I also agree with his focus, at para. 47, on the legislature’s choice of a ‘reasonableness’ standard for determining aggregate liability and with the three criteria he sets out to ensure that both sides are treated fairly by the assessment:
whether the non-individualized evidence presented by the plaintiff is sufficiently reliable;
whether use of the evidence will result in unfairness or injustice to the defendant, such as overstatement of its liability: see Healey v. Lakeridge Health Corp., 2010 ONSC 725, 72 C.C.L.T. (3d) 261, at para. 284, affirmed 2011 ONCA 55, 103 O.R. (3d) 401; and
whether the denial of an aggregate approach will result in a “wrong eluding an effective remedy” and a denial of access to justice: see Markson v. MBNA Canada Bank, 2007 ONCA 334, 85 O.R. (3d) 321 at para. 42, leave to appeal refused [2007] S.C.C.A. No. 346.
[77] Using those criteria to assess the evidence presented, the trial judge analyzed the components of an award that would properly compensate each class member for enrolling in the program following the unfair practice, and carefully assessed which of those components could and which could not be assessed on an aggregate basis. His approach was careful and measured, striving to achieve the access to justice and efficiency goals of the Class Proceedings Act while ensuring compliance with s. 24(1).
[78] Finally, although the quantification of damages was not originally certified as a common issue, the trial judge was not precluded from invoking the aggregate damages provision after finding liability: Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC 57, [2013] 3 S.C.R. 477, at para. 134.
Damages as a remedy for a statutory claim under the Consumer Protection Act
(a) The question before the trial judge
[79] The specific question before the trial judge was whether aggregate damages could be awarded in this case as the remedy for an unfair practice under s. 18(2) of the Consumer Protection Act. It therefore involved the interaction between the Consumer Protection Act and the Class Proceedings Act.
[80] Section 18(2) of the Consumer Protection Act describes the remedy that a consumer is entitled to after entering into an agreement following an unfair practice, where rescission is not possible:
18(2) A consumer is entitled to recover the amount by which the consumer’s payment under the agreement exceeds the value that the goods or services have to the consumer or to recover damages, or both, if rescission of the agreement under subsection (1) is not possible[.]
[81] The trial judge had already found at the common issues trial that rescission was not possible.
[82] At the damages trial, the parties had agreed that the court should evaluate damages based on the tort measure, that is, the award should put the plaintiffs into the position they would have been in had the wrong not been committed. However, they could not agree on two key related issues:
Even without reliance as an element of establishing an unfair practice, is an award of damages dependent on a causal connection between each plaintiff’s claimed damages and the misrepresentation?
In determining the amount of damages, does the court have to determine on an individual basis what each of the plaintiffs would have done “but for” the misrepresentation?
[83] In other words, although GBC had agreed that the tort measure of damages should apply, its position was that the tort measure would work only if damages were assessed on an individual and not an aggregate basis. GBC linked the measure of damages suffered by each plaintiff to how much each relied on or was induced by the misrepresentation to enter into the agreement.
[84] The trial judge concluded that he could avoid answering both questions. He gave three reasons:
Some leading commentators had said that the tort measure was the appropriate one for assessing damages for negligent misrepresentation under modern consumer protection laws;
Reliance is not necessary for entitlement to a remedy for an unfair practice under the Consumer Protection Act; and
A sufficient causal connection had already been established for the purposes of a remedy under s. 18(2) of the Act by factual findings he had previously made based on evidence from the three representative plaintiffs.
[85] In particular, he had found, extrapolating from the evidence of the representative plaintiffs, that all class members were attracted to the GBC program not by the graduate certificate they would receive, but by the opportunity to obtain the three industry designations. As I discuss below, the latter finding was an error, but ultimately did not affect the cogency of the result.
(b) The role of reliance in causation and the measure of damages
[86] The Consumer Protection Act came into force in 2005. It replaced the Business Practices Act, R.S.O. 1990, c. B.18, which was enacted in 1974. The latter Act also contained a remedy of rescission and damages for an unfair practice where a consumer entered into an agreement following a false, misleading or deceptive representation: ss. 2 and 4(1). Unlike under the Consumer Protection Act, the Business Practices Act remedy was only available where the consumer was induced to enter into the agreement by the misrepresentation.
[87] That inducement requirement was removed from the new Act. A consumer who enters into an agreement following a misrepresentation is entitled to rescind the agreement and to claim damages with no inquiry into whether the consumer relied on the misrepresentation or was induced by it into entering into the agreement.
[88] Reliance on a misrepresentation will not normally be a common issue in a class action, as it will depend on the individual history of each consumer: see e.g. McKenna v. Gammon Gold Inc., 2010 ONSC 1591, 88 C.P.C. (6th) 27, at para. 161, leave to appeal on this issue refused 2010 ONSC 4068 (Div. Ct.); and Mouhteros v. DeVry Canada Inc. (1998), 1998 14686 (ON SC), 41 O.R. (3d) 63 (Gen. Div.), at pp. 72-73, as well as the Supreme Court’s reference to the ruling of the certification judge on this issue in Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60, at paras. 124-125.[^1] By removing any requirement for reliance or inducement, common issues that are determinative of whether there is liability for a Consumer Protection Act claim can be certified, as they were in this case.
[89] The removal of the need for inducement or reliance is consistent with and facilitates the use of the Consumer Protection Act as a basis for class actions. Section 8 of the Consumer Protection Act specifically contemplates class proceedings in respect of a consumer agreement and proscribes the ability to opt out of that right. The Supreme Court of Canada has recently endorsed the use of class actions to achieve the goals of similar legislation in Quebec: see generally Richard v. Time Inc., 2012 SCC 8, [2012] 1 S.C.R. 265 and Bank of Montreal v. Marcotte, 2014 SCC 55, [2014] 2 S.C.R. 725.
[90] GBC argued, both at trial and on appeal, that to claim and be awarded damages under s. 18(2), a consumer still needs to establish causation. I agree. However, the necessary causal link is the link between the damages and the agreement, i.e. that the consumer suffered damages that flowed from entering into an agreement after or while an unfair practice was occurring. What is not required is a causal link between the actual unfair practice and the damages. That is because damages are payable regardless of reliance. To require the causal link suggested by GBC would reintroduce the need for reliance or inducement into the remedy for an unfair practice. It would therefore be wrong in law.
[91] In this regard, the trial judge made two analytical errors in response to submissions by GBC on causation. First, he erred in suggesting that because the three representative plaintiffs took the program in order to obtain the industry designations, he could attribute the same motivation to all members of the class. A court cannot extrapolate from the motivation of one person to a conclusion respecting others. As discussed above, proof of reliance must be based on evidence of the experience of each individual class member. An attempt to use individual evidence of damage as the foundation for an award of aggregate damages was similarly disapproved by this court in Fulawka v. Bank of Nova Scotia, 2012 ONCA 443, leave to appeal refused [2012] S.C.C.A. No. 326.
[92] The trial judge also erred by suggesting that causation for the purpose of a damages award under s. 18(2) was established because there was group reliance on the misrepresentation about the industry designations. As discussed, the right to the damages remedy for an unfair practice under the Consumer Protection Act arises from entry into the agreement. Damage and compensation for it are based on the plaintiffs’ change in position, not on any reliance on the unfair practice. Because the award of aggregate damages was based on entering into the agreement and not on reliance, these errors did not affect the outcome.
[93] To summarize my conclusions on this issue, there is no merit to the submission by GBC that the trial judge erred by awarding some aggregate damages and by not requiring individual proof of reliance in order to quantify and award damages. In a statutory claim for an unfair practice under the Consumer Protection Act, reliance is not a component of the claim.
(c) Application of the damages principles
[94] In my view, it was open to the trial judge to accept the parties’ agreement to use the tort measure of damage, and also to apply their agreed formula. In his text, The Law of Damages, referred to by the trial judge, Professor Waddams discusses the measure of damages in statutory remedies for misrepresentation, including the Ontario Consumer Protection Act. He explains that the language of s. 18(2) that prescribes the compensation entitlement for a plaintiff, together with the availability ofpunitive and exemplary damages in s. 18(11), give a court “complete flexibility to award whatever damages would be appropriate at common law” including the restitutionary measure. Having said that, he would reject using the contractual measure: see Steven M. Waddams, The Law of Damages, loose-leaf, 2nd ed. (Toronto: Canada Law Book, November 2015 release at paras. 5.690 to 5.700).
[95] The plaintiffs will receive compensation for what they paid based on recovery of the direct expenses incurred for tuition, books and travel. Deducted from that is the value of what they received from GBC, which was the residual value of the course measured as a percentage of the direct costs of the program. The agreed-upon formula for damages will put the plaintiffs back into the position they were in before they entered into the agreement, except for having taken the course and paid what it was actually worth.
Other Issues
[96] I turn now to the five specific issues raised by GBC in its factum.
(a) Students who failed or withdrew
[97] GBC submits that it was an error for the trial judge to permit students who either failed or withdrew from the program to remain in the class because they could never have obtained the industry designations.
[98] This argument misapprehends the reason the trial judge maintained this group in the class. He concluded that they qualified for damages because they entered into their agreements with GBC following the unfair practice. Their direct costs were the same as those of the other members of the class. However, the trial judge recognized that a deduction from their damages of any tuition refunds they received would be required to ensure that they were not doubly compensated. I would also deduct the residual value of the program. Their failure to complete the program and obtain the residual value cannot be attributed to GBC.
(b) Fulawka error
[99] GBC next submits that the trial judge erred in his assessment of aggregate damages by relying on the evidence of individual plaintiffs and extrapolating from that evidence for the whole group, contrary to this court’s decision in Fulawkaat paras. 135-137, 139 and 142. As an example, GBC objected to the trial judge’s use of Ms. Ramdath’s evidence that she paid $500 for new text books as part of the evidence he used to estimate the average cost of textbooks for the class.
[100] I do not agree with this submission. The trial judge looked for reliable evidence, in order to “reasonably” determine components of aggregate damages, as required by s. 24(1)(c). The average textbooks cost from the GBC Guide for International Students was $900. The use he made of the evidence from Ms. Ramdath’s affidavit was to test the cost figure he arrived at. He concluded his analysis of the textbooks component by observing that the $400 amount he determined was less than half of the amount suggested for the cost of textbooks in GBC’s Guide for International Students. His reasoning and conclusion were reasonable.
[101] Other pieces of evidence to which GBC objects amount to an attack on evidentiary decisions made by the trial judge that attract significant deference from this court. The trial judge properly instructed himself on the test he had to apply, which included that, ultimately, the damages awarded could not amount to an overstatement of the defendant’s liability. There is no basis to now inquire into each evidentiary decision he made while applying that test. I would not give effect to these objections.
(c) Residual value methodology
[102] GBC further objects to the method the trial judge used to assess the residual value of the program. It argues that the trial judge was required to focus on the value of the unfair practice as a component of the value of the program; instead, he determined that the residual value of the program should be measured based on the ability of its graduates to obtain actual jobs in international business.
[103] The problem with this submission is that the trial judge was led onto this path by the evidence of GBC’s expert, Mr. Stewart. He opined that neither the industry designations nor the program certificate itself had any significant value to employers looking to fill entry-level positions in the industry. The trial judge had found that obtaining such a job was the main purpose for taking the program.
[104] The trial judge was certainly entitled to accept and rely on this evidence. The assessment of damages is within the sole province of the trial judge, and “attracts considerable deference from this court”: see Ksiazek v. Halton (Police Services Board), 2010 ONCA 341, 267 O.A.C. 58, at para. 16 and Naylor Group Inc. v. Ellis-Don Construction Ltd., 2001 SCC 58, [2001] 2 S.C.R. 943, at para. 80. In this case, the trial judge’s conclusion was based on the evidence and was made in accordance with s. 18(2) of the Consumer Protection Act and s. 24(1) of the Class Proceedings Act.
[105] Contrary to another submission by GBC, the trial judge was entitled to reject as unhelpful for the purpose of valuation, as he did, the subjective evidence of some students who had opted out of the class or enrolled in later cohorts, that they found the program very valuable. Similarly, he was entitled to give little or no weight to the evidence of another GBC expert, Dr. Becker, that there was benefit to the course for a student over his or her lifetime, and to focus instead on the value of the program in obtaining entry-level jobs upon graduation.
[106] Essentially, GBC is objecting on appeal to the trial judge’s decisions regarding what weight to give to the evidence of the witnesses and to the methodology he chose for determining the residual value of the program. I note that the trial judge observed a number of times that GBC was less than helpful in the presentation of evidence that was available to it but that it chose not to present. Before coming to a final decision on residual value, in order to ensure fairness, particularly to GBC whose program was being valued, the trial judge gave the parties an opportunity to make further written submissions, and issued an addendum to his reasons on this point.
[107] In my view, the trial judge was entitled to make the evidentiary decisions he did. His conclusions are entitled to deference.
(d) Improper reliance on expert evidence
[108] GBC’s next ground of appeal is that the trial judge erred by relying on aspects of Dr. Charette’s evidence after saying that he would not do so. The trial judge stated in his main reasons that, given his approach, he did not have to decide on GBC’s motion to exclude Dr. Charette’s reports: “I do not rely on any of the impugned analytical portions in the Charette reports or his in-court testimony” (at para. 13). The clear implication from this statement is that he might rely on other parts of the reports and in-court evidence that were not impugned.
[109] The trial judge did refer to Dr. Charette in the subsequent addendum to his reasons dealing with the residual value of the program. He was addressing the issue of how many graduates of the program had obtained jobs in their field, based on survey data presented by GBC, and how many of those were looking for other jobs, which the trial judge viewed as an indicator of job dissatisfaction. He attributed that dissatisfaction to low salary levels compared to young university graduates in Ontario, as disclosed by census data. Dr. Charette had opined that the low salary levels could be indicative of a negative impact on the earning level of a student with a university degree who then took a college diploma program.
[110] This was one observation (together with three others that were not based on Dr. Charette) that appeared to contribute to the trial judge’s conclusion that the residual value of the program was lower than he had previously believed, and was probably 10 percent of direct costs, not 15 to 20 percent as he had stated in his initial reasons. However, he emphasized that the residual value could only be a best estimate based on the evidence presented, and again commented on “the quality of the evidence (or lack thereof) presented by GBC” (addendum, at para. 7). In order to ensure fairness to GBC, he concluded that the residual value was 15 percent of the direct costs of the program.
[111] The trial judge also referred to Dr. Charette’s evidence in his initial reasons on damages, both in respect of flight costs and on the significance to residual value of the program’s continued oversubscription, despite not including the industry designations.
[112] I see no error in these three references. The trial judge was well aware of his own initial ruling and therefore confined his references to what he viewed as the unimpugned portions of Dr. Charette’s evidence. It is also clear that in each case, he treated Dr. Charette’s evidence, at most, as confirmatory rather than as the sole basis for any finding. For example, in respect of the significance of the oversubscription issue, the trial judge’s reference began, at para. 79: “As Professor Charette explained, and as all of us understand,…”
[113] I would not give effect to this ground of appeal.
(e) Denial of examination for discovery
[114] The fifth alleged error by the trial judge was denying GBC the ability to examine each class member for discovery in order to obtain individual evidence on such issues as who travelled back home after graduation, what the residual value of the program was to each student, the actual expenditures by each for textbooks, who tried to mitigate, and who would not have taken the industry exams in any event. GBC asserts that the effect of this ruling was to shift the onus of proof.
[115] This ground is essentially another attack on the trial judge’s conclusion that he could award aggregate damages based on direct costs minus residual value. To the extent that this ground targets the accuracy of the aggregate damages award, that factor is addressed in the trial judge’s formulation by ensuring that the defendant’s overall liability is not overstated, even if some members of the class may be over- or under-compensated on individual expenditures.
Conclusion
[116] I would allow the appeal and reinstate the third cohort into the class. I would dismiss the cross-appeal and affirm the aggregate damages award to the first two cohorts, subject to the deduction of residual value for the students who did not complete the program. As the trial judge did not address the application of the aggregate damages calculation to the third cohort, based on the available evidence about that cohort, including how many of them were able to obtain one or more industry designations, I would refer the assessment of damages in relation to the third cohort back to the trial judge.
[117] As the appellants were successful on the appeal and substantially successful on the cross-appeal, I would award costs fixed at $17,000, inclusive of disbursements and HST to the appellants, respondents by cross-appeal.
Released: “KNF” December 24, 2015
“K. Feldman J.A.”
“I agree. E.A. Cronk J.A.”
“I agree. Grant Huscroft J.A.”
[^1] It should be acknowledged that reliance as a common issue may not be impossible. I can imagine a situation, for example, where one of the recitals to a consumer agreement states that the consumer has read and relied on a previous document, so that the recital itself provides the proof of reliance. See for another example Cannon v. Funds for Canada, 2012 ONSC 399, at para. 351.