COURT OF APPEAL FOR ONTARIO

CITATION: Sankar v. Bell Mobility Inc., 2016 ONCA 242

DATE: 20160404

DOCKET: C60176

Strathy C.J.O., LaForme and Huscroft JJ.A.

BETWEEN

Celia Sankar

Plaintiff (Appellant)

and

Bell Mobility Inc.

Defendant (Respondent)

Louis Sokolov, Jean-Marc Leclerc and Christine Davies, for the appellant

Steve Tenai and Guy White, for the respondent

Heard: November 23, 2015

On appeal from the judgment of Justice Edward P. Belobaba of the Superior Court of Justice, dated February 12, 2015, reported at 2015 ONSC 632.

Strathy C.J.O.:

[1] This appeal is about prepaid wireless phone card accounts. It concerns the fate of the balance remaining in a Bell Mobility Inc. (Bell) subscriber’s account when she fails to “top up” the account before the end of its “active period”.

[2] Bell’s prepaid “top-ups” allow customers to add credit to their accounts and extend their active periods that give them access to Bell’s wireless network. Bell’s practice, during the period at issue, was to claim unused funds the day after the end of the active period. For example, if the active period ended on June 30, Bell’s practice was to claim the unused funds on July 1, if the account had not been topped-up in order to extend the active period.

[3] The appellant’s certified class action alleges that Bell collected those funds improperly. She claims the contract provided that Bell had to wait until the second day after the end of the active period, not the first day. Alternatively, she alleges, Bell claimed funds improperly because Ontario legislation forbids the imposition of expiry dates on prepaid phone cards.

[4] The motion judge ruled that Bell did not breach its contract and that the gift card regulations found in O. Reg. 17/05, as amended (the Gift Card Regulation)[1], under the Consumer Protection Act, 2002, S.O. 2002, c. 30 Sched. A, do not apply to prepaid phone cards. He therefore granted summary judgment answering the common issues in Bell’s favour and dismissed the class action.

[5] The appellant challenges the motion judge’s conclusions on both issues. She asserts that the motion judge failed to consider the prepaid wireless contract as a whole, having regard to the expiry dates assigned by Bell and communicated to subscribers. She also submits that the motion judge erred in finding that the Gift Card Regulation is inapplicable to Bell’s phone cards.

[6] For the reasons that follow, I would dismiss the appeal.

A. Breach of contract claim

[7] Bell markets prepaid cell phone services under three brand names: Bell Mobility, Solo Mobile, and Virgin Mobile. As the motion judge noted, and here I borrow liberally from his reasons, Bell offered different active periods and pricing for its three brands. The active periods ranged from 30 to 365 days and the cost of credits that could be purchased ranged from $15 to $200, depending on the length of the active period. Generally, the longer the active period the more the card cost and the greater the credits that could be applied against particular Bell services during the active period. Thus, customers could choose a plan to suit their budgets and anticipated usage.

[8] All plans had an active period. At the end of the active period access to Bell’s services terminated unless the plan was renewed. If not, the prepaid credits expired and were forfeited to Bell. If the customer “topped up” the prepaid account balance before expiry, the unused balance was added to the new top-up and became subject to the new active period.

[9] There were different ways to top up the account. Customers could pre-authorize the automatic top-up of their accounts through their credit or debit cards when the balance fell below a certain floor or was about to expire. Or, they could “manually” top up with a credit card through the brand’s web site or by purchasing a phone card from a retainer. Virgin Mobile customers could also “manually” top up with a debit card. When customers topped up their accounts, they received a PIN (personal identification number) receipt, containing a unique code. When the customer wished to activate the top up, she could enter the code on the brand’s website or by text or other communication to Bell, thereby adding the top up value to the balance in the prepaid account.

[10] The focus of this action is the manual form of top up through the purchase of prepaid cards and PIN receipts.

[11] The relevant portion of the Bell Mobility and Solo Mobile terms of service were as follows:

Value deposited into your prepaid account is available as prepaid credits for your Service and such credits are non-refundable, non-transferable, and will expire after a specified time period.

[12] The Virgin Mobile terms of service stated the following:

All Top Ups ... have specified active periods and an expiry date. The active period starts on the date you place the Top Up on your account. Any Top Up balance on your account after the expiry date is forfeited and non-refundable. If you Top Up your account before your existing credit expires or is used up, then your existing credit is added to the new Top Up value and the active period of the earlier Top Up is extended so that the later expiry date of the two Top Ups is valid for the entire amount.

[13] The motion judge relied on certain additional materials in his interpretation of the agreements.

[14] First, as I have noted, the prepaid cards sold by retailers for these brands provided for different pricing and active periods. The cards used different terminology to describe the active period. Bell Mobility and Solo Mobile cards stated, for example, “$15 valid for 30 days.” Virgin Mobile cards said, for example, “Funds expire, $15 – 30 days after activation.”

[15] Second, the PIN receipt customers received on payment for the card or top-up, stipulated, for example, “$15 valid 30 days” (Bell Mobility), “$20 Good for 45 days” (Solo Mobile), and “Funds expire, $15 - 30 days after activation” (Virgin Mobile).

[16] The breach of contract claim boiled down to whether the prepaid card expired at the end of the last day of the active period, or the day after. If the card did not expire until the day after the end of the active period, then Bell had breached its contract by treating the purchaser as having forfeited the unused balance on that day. In my view, the motion judge correctly held that the card expired at the end of the last day of the active period, not on the day after. Bell was therefore entitled to collect the unused balance after the last day of the active period.

[17] The motion judge found that, at the time of contracting, Bell intended, and subscribers understood, that the agreement would expire at the end of the relevant active period. They understood that any unused funds would be claimed by Bell after that time, unless the account was “topped up” before expiry. The information on the prepaid cards and the PIN receipts was consistent with the language of the subscriber agreements, with brand brochures and pamphlets available at retailers and with the information on Bell’s websites.

[18] While this matter was under reserve, this court released its decision in MacDonald v. Chicago Title Insurance Company of Canada, 2015 ONCA 842. The court held that the standard of review applicable to a standard form insurance policy was correctness. The appellant sought leave to make further submissions on the application of the decision and the court granted leave to both parties to do so.

[19] Based on Chicago Title, the appellant submits that the standard of review is correctness, because Bell’s contracts are standard form contracts of adhesion. She submits that the factual matrix should have played no role in the interpretation of the contact. The motion judge should not have relied on extrinsic materials, such as PIN receipts, phone cards, brochures and websites to interpret the contract. Instead, the appellant says, the motion judge should have considered subsequent communications from Bell to its customers, in which Bell set out the expiry dates of their cards.

[20] Bell, on the other hand, submits that the contract terms were contained not only in the agreements made when customers initially signed up for wireless service, but also in pricing and other contractual information, including expiry dates, set out in the prepaid cards and PIN receipts, which customers obtained when they bought top-ups. Bell says that the motion judge properly considered these documents, and others, in interpreting the contract. It also says that the motion judge rightly ignored communications made by Bell after customers had made their pre-payments.

[21] Bell says that because the motion judge was entitled to rely on the factual matrix in this way, the standard of review should be one of palpable and overriding error.

[22] In my view, in addition to the initial agreements, the motion judge was entitled to rely on other documents that formed part of the contractual relationship between the parties – the PIN receipts and phone cards referred to earlier. These, taken together with the agreements made when they subscribed to the service, formed the contract between every customer and Bell. It was appropriate to answer the common issue based on these documents and indeed the answer would have been incomplete had they not been considered.

[23] There is a difference between considering the factual matrix and considering the documents that make up the contract itself. It is not uncommon in modern contracts, including contracts made partly on “paper” and partly on the internet, for the contract terms to be found in several “documents”. And it is well-settled that where parties enter into interrelated agreements, the court is required to look to all those agreements to determine their construction.

[24] Thus in 3869130 Canada Inc. v. I.C.B. Distribution Inc., 2008 ONCA 396, this court stated that a court may have regard to the language of other contracts made at the same time. It quoted with approval from John D. McCamus, The Law of Contracts (Toronto: Irwin Law Inc., 2005), at p. 715:

Many transactions, especially large commercial transactions such as the purchase and sale of a large and complex business, may involve the execution of several agreements. In such contexts, it is an interesting question, then, whether in the interpretation of one of the agreements, regard may be had to the others. The basic principle is that such regard may be had only where the agreements essentially form components of one larger transaction. Where each agreement is entered into on the faith of the others being executed and where it is intended that each agreement form part of a larger composite whole, assistance in the interpretation of any particular agreement may be drawn from the related agreements. [Emphasis added. Citation omitted.]

[25] In this case, the agreements were not contemporaneous, but they were interrelated. The initial agreement contemplated that customers would top up their accounts through Bell’s websites, through the purchase of phone cards and through the purchase of PIN receipts. These were not simply part of the factual matrix – they contained contractual terms themselves. The motion judge properly had regard to these documents in order to determine the contract terms. Because these terms were common to all class members (albeit in slightly different language depending on the manner of top-up), it was appropriate to address the issue as a common issue.

[26] In my view, based on Sattva and Chicago Title, a correctness standard applies to the interpretation of the Bell contracts, which included standard terms of service and standard form phone cards and PIN receipts. The factual matrix applicable to the dealings between individual customers and Bell plays no role in the interpretation of the contracts. Indeed, if that did play any role, the interpretation of the contract would not be a suitable common issue, because the answer could vary depending on the underlying facts.

[27] The appellant says that the motion judge should have considered the text messages and other communications made by Bell to its customers prior to the expiry of their top-ups to notify them that their funds were about to expire. But these communications took place after the contract had been made. As the motion judge properly found, at para 28:

If any class member misunderstood the follow-up "expiration date" messages as meaning that unused funds would expire on Day 31 and would be seized on Day 32, and she relied on said messages to her detriment (by not topping up in time and forfeiting the unused balance) and the defendant did not grant a courtesy extension, then her remedy, as already noted, was two-fold: either a claim in breach of contract arguing promissory estoppel or a claim in misrepresentation. But both of these remedies would require proof of individual reliance and neither would be amenable to a class proceeding. That is why, as I have already noted, neither promissory estoppel nor misrepresentation was alleged by the plaintiff or pursued herein.

[28] These communications were not part of the factual matrix surrounding the formation of the contract. At their highest, they were post-contractual representations.

[29] In my view, the motion judge’s interpretation of the contract was correct. It was based on Bell’s Terms and Conditions of Service and other documents available at the time of contracting and the ordinary, grammatical and common sense meaning of the contract language.

[30] The plain meaning of the language on the prepaid cards and the PIN receipts, when read in context of the agreements made by customers when they initially subscribed for the service, was, as the motion judge found, that the subscriber’s ability to use the prepaid funds expired at the end of the relevant active period.

[31] Indeed, the appellant’s complaint to the CRTC confirmed that she understood from the contract documents that her account would expire at the end of the relevant period if it was not topped-up.

[32] As the motion judge noted, the appellant’s real complaint, and the real complaint in this class action, is that Bell’s subsequent communications to its customers – made after they had purchased their top-ups and as the top-up was about to expire – were misleading. That is because they may have created the impression that subscribers had an additional day after the end of the active period to “top up” before their funds expired. I agree with the motion judge that this was essentially a claim for misrepresentation or promissory estoppel, neither of which was before him, because neither was held to be amenable to resolution as a common issue in the class proceeding.

[33] I would therefore dismiss the first ground of appeal.

B. Gift Card Regulation

[34] The parties made no submissions in either this court or in the court below concerning the legislative jurisdiction of the Province of Ontario over prepaid phone cards. The appellant submits that if Ontario has such jurisdiction, an issue that was left for another day if necessary, the cards cannot have expiry dates. She submits the motion judge erred in his interpretation and application of ss. 23 and 25.1-5 of the Gift Card Regulation.

[35] The Gift Card Regulation is made under the Consumer Protection Act. Part IV of that statute deals with specific consumer agreements, including “future performance agreements.” A future performance agreement is defined in s. 1 as a “consumer agreement in respect of which delivery, performance or payment in full is not made when the parties enter the agreement”. That is, as the name suggests, an agreement that is to be wholly or partly performed in the future. Sections 21 to 26 of the statute set out certain consumer rights in relation to future performance agreements, none of which is applicable here.

[36] The Gift Card Regulation states the requirements for future performance agreements generally and for “gift card agreements” in particular. The regulation defines both “gift card” and “gift card agreement” as follows:

23. In the Act and this Part,

“gift card” means a voucher in any form, including an electronic credit or written certificate, that is issued by a supplier under a gift card agreement and that the holder is entitled to apply towards purchasing goods or services covered by the voucher; (“carte cadeau”)

“gift card agreement” means a future performance agreement under which the supplier issues a gift card to the consumer and in respect of which the consumer makes payment in full when entering into the agreement; (“convention de carte cadeau”)

[37] As the motion judge noted, there is a degree of circularity to these definitions, in that each term is defined partly by reference to itself.

[38] The regulation prohibits an expiry date on the future performance of a gift card agreement:

25.3(1) No supplier shall enter into a gift card agreement that has an expiry date on the future performance of the agreement.

25.3(2) A gift card agreement with an expiry date on its future performance shall be effective as if it had no expiry date if the agreement is otherwise valid.

[39] Based on the ordinary meaning of the terms “gift card” and “gift card agreement,” the motion judge interpreted those terms as requiring an actual gifting of the card or voucher to a third party. In reaching this conclusion, he held that “[t]here is nothing in the language of the Gift Card Regulation that explicitly limits or confines its application to gift cards as commonly understood.” He noted, however, that in introducing the regulation, the Minister of Government Services observed that gifts cards “are purchased in good faith by the people of Ontario for their family and friends.”

[40] He concluded that prepaid phone cards are generally not subject to the Gift Card Regulation, because they are purchased for personal use and not as gifts. In his view, only if a prepaid phone card was “purchased as a gift for a third party, [would it] qualify as a ‘gift card’”.

[41] He held that even phone cards and PIN receipts purchased as gifts for third parties would not contravene the regulation, because they did not have expiry dates. He stated, at para. 44:

They could be redeemed, i.e. activated, at any time without limitation. … And the fact that the wireless services provided thereafter were time limited, i.e. after this particular gift card was redeemed (by activation), is not a breach of any provision in the Gift Card Regulation.

[42] The motion judge held, in the alternative, that even if pre-paid phone cards were “gift cards”, they were nonetheless exempted under s. 25.1(b) of the Gift Card Regulation, which exempts any “gift card that covers only one specific good or service” from the no expiry date provision, among others. The gift cards here, he said, covered only one specific service: access to Bell’s network.

[43] The appellant argues that there is nothing in the legislation to show that it was limited to future performance agreements purchased as gifts. She also says the Bell cards are not for one specific service, but rather for a variety of services, including voice, data, voicemail, call display, long distance, roaming, text, picture, downloads, streaming, browser usage and internet access. These services are priced at specific rates, which are then deducted from the consumer’s account based on usage of each service.

[44] The respondent agrees with the motion judge and argues that access to the network is a single service; all the other services are incidental.

[45] I do not find it necessary to address the issue of whether the Gift Card Regulation applies only to gift cards purchased as gifts. Nor is it necessary to consider whether the case falls within the single service exception, although there is a strong argument that the consumer is purchasing a single service – access to Bell’s network for a defined period of time.

[46] Rather, I rest my conclusion on the interpretation of the Gift Card Regulation, to which the motion judge alluded in his analysis. The regulation prohibits an expiry date on the “future performance of the agreement”. It provides that a future performance agreement with an expiry date is to be effective “as if it had no expiry date”. Its purpose is to prevent the expiry of the agreement before the seller of the card has delivered the goods or performed the services promised under the agreement. It does not prohibit an agreement being time-limited – for example, use of a gym for 30 days after activation of the membership, or use of wireless services for 30, 60, 90 or 365 days after activation.

[47] The question, therefore, is “what does performance of the wireless agreement entail?” Does it mean that Bell performs its agreement by giving the customer access to its wireless network for 30, 60, 90 or 365 days, or does it mean that Bell must provide wireless service until the customer uses up all the prepaid credits in his or her account?

[48] The plain meaning of the contracts is that customers were buying a defined period of wireless service. Significantly, the motion judge found, at para. 12, that “[a]t no time during the class period did class members receive anything less than the full period of wireless service for which they had contracted to receive.”

[49] But, although the performance of the contract entailed a defined period, the purchaser or donee of a Bell card or PIN receipt could decide when she wanted to activate the service in order to begin that period. The service could be activated at any time in the future. Bell was required to perform the agreement once the consumer decided to activate the service. The agreement was fully performed by Bell when it gave the customer access to its wireless services for the agreed-on period.

[50] The fact that the service purchased was for a defined period, calculated on the dollar value of credits the consumer added to the account, was not a breach of the regulation. To hold otherwise would mean that Bell was required to keep the wireless service and number available to the customer indefinitely, a patently unreasonable outcome. As the motion judge noted, at para. 44 of his reasons, “section 25.3(1) [of the Gift Card Regulation] prohibits an expiry date on the gift card itself and not on the goods or services purchased with that gift card.”

[51] It is noteworthy, although not in any way determinative, that in establishing the Wireless Code, the Canadian Radio-television and Telecommunications Commission (CRTC) specifically addressed this issue, after hearing submissions from consumer groups and wireless providers: Telecom Regulatory Policy CRTC 2013-271. The Wireless Code, effective December 2, 2013, established a mandatory code of conduct for all providers of retail mobile wireless voice and data services. The CRTC noted that prepaid cards are subject to an expiry date ranging from 15 days to one year after activation, depending on the value of the card, and to continue service and/or carry over credits beyond the expiry date consumers can “top up” their accounts via the service provider’s website and/or by purchasing additional prepaid cards.

[52] The CRTC received complaints similar to those made by the representative plaintiff in this proceeding. Indeed, she herself made a complaint to the CRTC. She and other consumers were frustrated that their account balances expired if they did not “top up” and that they lost the balance in the account if they missed the end of their active period, by even one day. They asked the CRTC to require wireless service providers to carry over prepaid account balances indefinitely or to prohibit the expiry of prepaid cards.

[53] To address these concerns, the CRTC required wireless service providers to hold prepaid card customers’ accounts open for seven days following expiry of an activation period to give consumers additional time to “top up” their accounts. This, it said, would not impose significant burdens on service providers, would enhance the clarity of prepaid billing services and policies, would balance consumer interests with “current market realities” and would increase flexibility for frequent users of prepaid services.

[54] The commission concluded, however, that it would not be appropriate to require service providers to permit consumers to carry over their prepaid unused minutes indefinitely. It noted that prepaid card services provide access to the network for a specific period of time. It stated, at para. 349 of its decision:

The Commission considers that the evidence on the record of the proceeding does not support consumers’ request for [wireless service providers] to carry over their prepaid unused minutes indefinitely. In this regard, the Commission notes that wireless services, including prepaid card services, provide access to the network for a specific period of time with specific usage limitations that are distinct for each aspect of the service. The Commission considers that imposing a requirement that services be provided beyond the limitations set out in the service agreement would not be appropriate.

[55] As the motion judge noted, in November 2013 Bell amended its top-up agreements to reflect the seven-day grace period conferred by the CRTC’s decision.

[56] It is true that this conclusion means that consumers, such as the appellant, may find themselves in a situation where their phone cards expire before they have had a chance to use all their prepaid credits. They may also find themselves on a merry-go-round they cannot get off, because they must constantly top up an account with a credit balance, because they have not used up all their credits from the previous active period. Depending on one’s perspective, that may be unfair or it may be part of the price paid for the flexibility of a prepaid phone card. The CRTC does not address this issue. If the Province of Ontario has jurisdiction over phone cards – an open question – it may choose to do so.

[57] In my view, the motion judge was correct to grant summary judgment in favour of the respondent on the common issue relating to the Gift Card Regulation.

C. Disposition

[58] For these reasons, the appeal is dismissed.

[59] The parties agreed that costs should be awarded to the successful party in the amount of $20,000 all-inclusive, subject to the right of the Class Proceedings Fund to make submissions. A copy of these reasons shall be provided to the Fund by class counsel. Subject to any submissions by the Fund within 30 days, the respondent shall have its costs in the agreed amount.

“G.R. Strathy C.J.O.”

“I agree H.S. LaForme J.A.”

“I agree Grant Huscroft J.A.”

Released: April 4, 2016

[1] I will refer to this regulation as the Gift Card Regulation although it covers more than this subject. The same term was used in the certified common issue.