Cullaton v. MDG Newmarket Inc., 2019 ONSC 6432

Court File and Parties

COURT FILE NO.: 1850/16CP

DATE: 20191106

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Hugh Cullaton, Plaintiff

AND:

MDG Newmarket Inc., holding itself out as Ontario Energy Group and Ontario Energy Solutions, Evgueni Farber (Eugene Farber) and Home Trust Company, Defendants

BEFORE: Justice R. Raikes

COUNSEL: Jonathan J. Foreman, Jean-Marc Metrailler, counsel for the Plaintiff

Nicholas Kluge, Clifton Prophet, Marco Romeo, counsel for the Defendant, Home Trust Company

Marie Henein, Alex Smith, Mark Strychar-Bodnar, counsel for the Defendant, MDG Newmarket Inc.

Elliott Birnboim, Counsel for the Defendant, Evgueni Farber

HEARD: April 8, 9, 10 and 11, 2019

ENDORSEMENT

1This endorsement will address three motions:

1. A motion to approve the discontinuance of the action as against the defendant, Evgueni Farber (hereafter “Farber”);

2. A motion for certification; and

3. A motion by the plaintiff for summary judgment.

Motion to Discontinue

2The plaintiff moved for an order to discontinue the action as against Farber. On April 8, 2019, I endorsed the motion record that leave to discontinue was granted pursuant to s. 29 of the Class Proceedings Act, 1992 and the title of proceeding is amended accordingly. I also endorsed that notice was not required pursuant to ss. 19 and 29. I indicated that reasons would follow. This decision sets out those reasons.

3The plaintiff and MDG entered into an agreement whereby MDG agreed to consent to certification of the action as against MDG provided that the claim against Farber personally was discontinued and abandoned. The agreement specified that certification was to be in the “precise form” agreed to between the parties. The plaintiff personally will also provide Farber with a full and final release.

4The motion was presented to me for an order on the same terms as the agreement: the claim against Farber is discontinued and abandoned provided that certification is on the terms contained in a draft order for certification submitted.

5During oral submissions, I sought clarification from counsel: what if I was not content to certify the action precisely as they had agreed? For example, what if I reframed one or more common issues? What if I decided that certain issues should not be certified as Home Trust argued?

6Initially, plaintiff’s counsel submitted that there was no good reason not to accept the agreement and terms for certification agreed upon. It was negotiated at arm’s length between experienced counsel and the agreement provides a real benefit to the class – certification as against MDG is uncontested.

7Certification is not a rubber stamp process even where on consent and experienced class counsel are involved. I asked that counsel for the plaintiff and MDG confer and advise of their positions in the event the exact terms of certification they agreed to were not accepted; specifically, what if the common issues were altered by me? When court reconvened, I was advised by counsel that both parties would accept whatever form the certification order took.

[8] Court approval is required for discontinuance as against a party to a class proceeding or proposed class proceeding: s. 29(1) Class Proceedings Act, 1992, S.O. 1992, c. 6.

9In order to approve a discontinuance under s. 29, the court must be satisfied that the interests of the class will not be prejudiced: Durling v. Sunrise Propane Energy Group Inc., 2009 CarswellOnt 9181 (S.C.J.) at paras. 14, 16, 17 and 19. Prejudice to remaining defendants is not a valid consideration: Durling at paras. 20 and 37.

10I am satisfied that the discontinuance as against Farber will not prejudice the class as:

a. Farber was not personally a party to any of the agreements.

b. It is far from obvious that the claim against Farber would survive the s. 5(1)(a) certification analysis and even if it did, would ultimately have genuine prospects for success at trial.

c. The resolution of that claim provides the class with a meaningful advantage by virtue of the consent to certification by MDG.

d. The principal parties to the alleged wrongful conduct remain in the action.

e. Farber has been cross-examined on the summary judgment motion and remains available for examination as the action progresses.

11Subsection 29(4) CPA requires the court to consider whether notice of the discontinuance need be given to class members under s. 19. In my view, separate notice was not required for the discontinuance. Notice to class members of the discontinuance can be addressed in the certification notice.

Certification Motion

12As indicated, MDG and the plaintiff have an agreement by which MDG consents to certification of this action as against MDG. Accordingly, MDG did not file a factum and did not make oral submissions opposing certification.

13By contrast, Home Trust opposed aspects of the motion for certification. Home Trust takes the following positions:

1. The Fresh as Amended Statement of Claim does disclose a cause of action against Home Trust; however, rescission is not possible because consumers are not in a position to return the rented equipment in new condition and services have been consumed.

2. There is an identifiable class but the proposed class definition is overbroad because it includes persons who entered into contracts since May 2012. The claim period extends beyond two years from the date the action was commenced. Claims in respect of contracts made more than two years before the action was commenced are barred by limitation periods.

3. Several of the proposed common issues advanced by the plaintiff require individual determinations and are inappropriate as common issues. The evidence adduced by the plaintiff as to a methodology for calculating aggregate damages is flawed and inadequate.

4. Accordingly, a class proceeding is not the preferable procedure.

a. The parties

14The plaintiff, Hugh Cullaton, is one of thousands of Ontario residents who entered into rental agreements for HVAC equipment from MDG Newmarket Inc. (hereafter “MDG”). On August 1, 2014, he entered into a Rental and Maintenance Agreement with MDG for a high efficiency furnace, an air conditioner and chimney liner. The monthly rental charge is $142.85. That charge will increase over the life of the agreement. A rental charge is payable for the useful life of the equipment which is estimated to be 15 years.

15MDG is a company based in Mississauga, Ontario. Farber is the directing mind of MDG. He is its sole shareholder, officer and director. MDG is in the business of renting and servicing, inter alia, gas furnaces, air conditioners, water heaters and water softeners to residential consumers in Ontario (referred to as “the equipment” or “the HVAC equipment”).

16Throughout the claim period, MDG used a standard form contract with consumers. That contract was vetted and approved by Home Trust and could not be amended without Home Trust’s prior agreement.

17Once a rental agreement was entered into, MDG removed the old equipment, if any, and installed the new rented HVAC equipment. As part of the agreement, MDG is to service the equipment during its useful life. It is undisputed that MDG is a “supplier” as defined in s. 1 of the Consumer Protection Act, 2002, S.O. 2002, c. 30 (Sch. A).

18Home Trust Company (hereafter “Home Trust”) is a federally regulated trust company. Its head office is in Toronto. Home Trust is in the business of lending money to consumers and businesses like MDG.

19In 2012, Home Trust and MDG entered into agreements (“Program Agreements”) by which Home Trust agreed to advance funds to MDG for the purchase of HVAC equipment for consumers with whom MDG had contracted. In return, Home Trust received an assignment of the rental revenue stream for consumer contracts for a period of 60 months, and Home Trust registered a Notice of Security Interest (NOSI) in the equipment in its name against the title to the consumer’s property.

20The amount of the NOSI was determined by the agreements between Home Trust and MDG based on the equipment rented. Consumers were not privy to the Program Agreements and were not told the amounts that would be specified in the documents registered against their title.

21Initially, rental payments by individual consumers were paid to an account held and administered by Home Trust. Later, a Blocked Account was used. Rental payments went into the Blocked Account and were automatically transferred to each of Home Trust and MDG in accordance with their agreement.

22If an individual consumer wished to discharge the registered security interest from title, he/she contacted Home Trust. A buyout option was available although not disclosed in the contract signed by the consumer. Home Trust dealt with consumers for buyouts.

b. Proposed Class

23The plaintiff proposes the following class definition:

“All persons in Ontario who are or were at any time party to a lease agreement of equipment with MDG Newmarket Inc. O/A Ontario Energy Group entered into between May 1, 2012 and the date of certification.

“Agreement” means an equipment lease agreement sold by MDG Newmarket Inc. O/A Ontario Energy Group (“OEG”) pursuant to Program Agreements entered into by OEG with Home Trust Company.

“Equipment” means furnaces, air conditioners, water heaters, water softeners, water purification systems, boilers, air cleaners, humidifiers, chimney liners, filters, and other equipment or services offered under the standard-form lease agreements.”

c. Nature of Claim

24The plaintiff claims for himself and the proposed class, inter alia, the following relief:

a. General damages calculated on an aggregate basis or otherwise;

b. Special damages for out-of-pocket expenses incurred;

c. An accounting, disgorgement and the creation of a constructive trust;

d. Punitive and exemplary damages;

e. A declaration that the defendants’ standard form agreements do not comply with the Consumer Protection Act, 2002;

f. Relief from amounts alleged owed or owing to the defendants;

g. Rescission and a declaration that the consumer contracts with class members are unenforceable;

h. Relief and damages under the Personal Property Security Act, R.S.O. 1990, c. P.10;

i. Relief under s. 160 of the Land Titles Act, R.S.O. 1990, c. L.5; and

j. A permanent injunction restraining the defendants from taking any further action in contravention of the Consumer Protection Act, 2002 and its Regulations or the Competition Act.

25The plaintiff asserts the following causes of action:

• Breach of the Consumer Protection Act, 2002, and its Regulations, O.Reg. 17/05 and O.Reg. 3/15.

• Breach of the Competition Act.

• Civil conspiracy.

• Unconscionable contract.

• Unjust enrichment.

• Waiver of tort.

26In broad terms, the plaintiff alleges, inter alia, that MDG rental agreements do not comply with disclosure requirements found in the Consumer Protection Act, 2002 and its Regulations, and constitute unfair practices. Once signed by the consumer, a security interest or lien is registered against title to the consumer’s property by Home Trust. That lien in favour of Home Trust is not authorized by the rental agreement and is itself misleading and deceptive. There is an expensive buyout program that is likewise not disclosed to consumers when they enter into the agreement.

27The agreement signed by the consumer is with MDG. MDG has Program Agreements with Home Trust. The plaintiff asserts that Home Trust dealt directly with consumers who have entered into the agreements, holds liens against their properties and administers accounts into which payments are received. It is jointly engaged with MDG in the business of renting HVAC equipment to consumers. It is a “supplier” of a product or service with MDG and is thereby bound by the disclosure requirements under the Consumer Protection Act, 2002. Alternatively, MDG is its agent and/or Home Trust is an assignee, and is liable to consumers under the Act as such. Further, MDG and Home Trust engaged in a civil conspiracy to create and sell unlawful consumer agreements in order to obtain and share illegal revenues. As a result, the defendants have been unjustly enriched at the expense of consumers.

28Suffice to say that Home Trust vigourously disagrees with the plaintiff’s characterization of its role, its rights and obligations, and whether its conduct gives rise to any liability. Those positions are forcefully advanced on the motion for summary judgment. For certification purposes, it is premature to engage in an assessment of the merits of its defences.

29I will deal with the causes of action asserted to the extent necessary below.

d. Proposed Common Issues

30The plaintiff proposes the following common issues:

Consumer Protection Act, 2002:

a. Do the defendants’ agreements fail to comply with the requirements of the Ontario Consumer Protection Act, 2002, including:

i. the unfair practices provisions contained in ss. 14 and 15 of that Act;

ii. the leasing requirements contained in Part VIII of that Act and any leasing requirements contained in the regulations under the Act; and/or

iii. the obligations respecting direct agreements and/or future performance agreements under Part IV of that Act?

b. If the defendants’ agreements fail to comply with the requirements of the Ontario Consumer Protection Act, 2002, are the class members entitled to a declaration that:

i. remedies under section 18 of that Act are available to them;

ii. the defendants’ agreements are not binding on the class members pursuant to section 93(1) of that Act; and/or

iii. remedies under another section of that Act are available to them?

c. Do the written sales and marketing representations of the defendant MDG on its website and elsewhere constitute unfair practices contrary to the requirements of the Ontario Consumer Protection Act, 2002?

d. If so, are the class members entitled to remedies pursuant to s. 18 of that Act?

e. If the class members are entitled to remedies, what should the protocol for the implementation of remedies be?

f. Should an equitable accounting be ordered in order to facilitate the construction of a remedial protocol for class members?

g. Can all or part of that remedies protocol be determined on an aggregate or automated basis pursuant to ss. 12, 24, 25, and/or 26 of the Class Proceedings Act?

Competition Act:

h. Do the defendants’ agreements and/or the sales and marketing representations of the defendant MDG constitute false and misleading misrepresentations contrary to s. 52 of the Competition Act?

i. If so, can causation of the class members’ losses be proven by the fact of any payments made by them pursuant to the requirements of the defendants’ lease agreements?

j. If so, are the class members entitled to remedies pursuant to s. 36 of the Competition Act? Can any such remedies be determined on an aggregate basis?

Civil Conspiracy:

k. Did the defendants conspire together to undertake unlawful acts which were directed towards the class members?

l. Did the defendants know that the conspiracy would likely cause injury to the class members?

m. Did the class members suffer economic loss as a result of the defendants’ conduct?

n. If the defendants are liable to the class members in conspiracy, what damages and other remedies are owed to class members?

o. Can any monetary remedies that are awarded be assessed and paid on an aggregate basis?

Equity – Unjust Enrichment

p. Have the defendants been unjustly enriched to the deprivation of the class members without juristic reason?

q. If the defendants are liable in equity, are the class members entitled to restitution and a constructive trust?

r. If a restitutionary award is made, can it be calculated and paid on an aggregate basis?

Unconscionable Contract:

s. Are the defendants’ agreements unconscionable contracts as a matter of common law?

t. If so, are the class members entitled to remedies? If so, what remedies are owed?

31The defendant, Home Trust takes issue with appropriateness of most of the above common issues. It is easier to set out which common issues are not disputed: a, c, h, k, l, and p.

Certification

a. General Principles

32The test for certification is set out in s. 5 of the CPA. The burden rests on the plaintiff to satisfy all of the criteria: AIC Limited v. Fischer, [2013] S.C.R. 949 at para. 48. Certification is mandatory where the requirements of s. 5(1) are satisfied: Hurst v. Berkshire Securities Inc., [2006] O.J. No. 3647 (S.C.J.) at para. 11.

33Section 5(1) states:

5 (1) The court shall certify a class proceeding on a motion under section 2, 3 or 4 if,

(a) the pleadings or the notice of application discloses a cause of action;

(b) there is an identifiable class of two or more persons that would be represented by the representative plaintiff or defendant;

(c) the claims or defences of the class members raise common issues;

(d) a class proceeding would be the preferable procedure for the resolution of the common issues; and

(e) there is a representative plaintiff or defendant who,

i. would fairly and adequately represent the interests of the class,

ii. has produced a plan for the proceeding that sets out a workable method of advancing the proceeding on behalf of the class and of notifying class members of the proceeding, and

iii. does not have, on the common issues for the class, an interest in conflict with the interests of other class members.

34The general principles applicable to a certification motion are summarized by Perell J. in Bennett v. Hydro One Inc., 2017 ONSC 7065 at paras. 59-61 as follows:

59For an action to be certified as a class proceeding, there must be a cause of action shared by an identifiable class from which common issues arise that can be resolved in a fair, efficient, and manageable way that will advance the proceeding and achieve access to justice, judicial economy, and the modification of behaviour of wrongdoers. (Sauer v. Canada (Atty. Gen.), 2008 CanLII 43774 (ON SC), [2008] O.J. No. 3419 (S.C.J.) at para. 14, leave to appeal to Div. Ct. refused, 2009 CanLII 2924 (ON SCDC), [2009] O.J. No. 402 (Div. Ct.)). On a certification motion, the question is not whether the plaintiff’s claims are likely to succeed on the merits, but whether the claims can be appropriately prosecuted as a class proceeding. (Hollick v. Toronto (City), 2001 SCC 68 at para. 16.) The test for certification is to be applied in a purposive and generous manner, to give effect to the goals of class actions; namely: (1) providing access to justice for litigants; (2) encouraging behaviour modification; and (3) promoting the efficient use of judicial resources. (Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46 at paras. 26 to 29; Hollick at paras. 15 and 16.)

60The purpose of a certification motion is to determine how the litigation is to proceed and not to address the merits of the plaintiff’s claim; there is to be no preliminary review of the merits of the claim. (Hollick, paras. 28 and 29) however, the plaintiff must show “some basis in fact” for each of the certification criteria other than the requirement that the pleadings disclose a cause of action. (Hollick, paras. 16-26) The “some basis in fact” test sets a low evidentiary standard for the plaintiffs, and a court should not resolve conflicting facts and evidence at the certification stage or opine on the strengths of the plaintiff’s case. (Pro-Sys Consultants v. Microsoft, 2013 SCC 57; McCracken v. CNR Co., 2012 ONCA 445.) In particular, there must be a basis in the evidence to establish the existence of common issues. (Dumoulin v. Ontario, [2005] O.J. No. 3961 at para. 25 (S.C.J.); Fresco v. Canadian Imperial Bank of Commerce, 2009 CanLII 31177 (ON SC), [2009] O.J. No. 2531 at para. 21 (S.C.J.); Singer v. Schering-Plough Canada Inc., 2010 ONSC 42 at para. 140.) To establish commonality, evidence that the alleged misconduct actually occurred is not required; rather, the necessary evidence goes only to establishing whether the questions are common to all the class members. (Pro-Sys, para. 110) The representative plaintiff must come forward with sufficient evidence to support certification, and the opposing party may respond with evidence of its own to challenge certification. (Hollick, para. 22) Certification will be denied if there is an insufficient evidentiary basis for the facts on which the claims of the class members depend. [See cases at footnote 32.]

61On a certification motion, evidence directed at the merits may be admissible if it also bears on the requirements for certification but, in such cases, the issues are not decided on the basis of a balance of probabilities but rather on that of the much less stringent test of “some basis in fact”. (Hollick, paras. 16-26; Cloud v. Canada (2004), 2004 CanLII 45444 (ON CA), 73 O.R. (3d) 401 at para. 50 (C.A.), leave to appeal to the S.C.C. ref’d, [2005] S.C.C.A. No. 50, rev’g (2003), 2003 CanLII 72353 (ON SCDC), 65 O.R. (3d) 492 (Div. Ct.)) The evidence on a motion for certification must meet the usual standards for admissibility. [See cases at footnote 34.] While evidence on a certification motion must meet the usual standards for admissibility, the weighing and testing of the evidence is not meant to be extensive, and if the expert evidence is admissible, the scrutiny of it is modest. (Griffin v. Dell Canada Inc., 2009 CanLII 3557 (ON SC), [2009] O.J. No. 418 at para. 76 (S.C.J.) In a class proceeding, the close scrutiny of the evidence of experts should be reserved for the trial judge. (Stanway v. Wyeth, 2011 BCSC 1057, aff’d 2012 BCCA 260.)

35The CPA is a procedural statute. The focus at the certification stage is on the form the action will take. It is not the time or place to assess the chances of success or merits of the claim. Rather, the question at this juncture is whether this is an appropriate case to proceed as a class proceeding.

s. 5(1)(a) - Cause of Action Criterion

a. General Principles

36Section 5(1)(a) requires that the plaintiff’s pleading disclose a cause of action. The applicable test is the same as that on a r. 21 motion: the “plain and obvious” test.

37The following principles apply:

• No evidence is admissible.

• The facts pleaded are accepted as true and accurate unless they are patently ridiculous or incapable of proof.

• The pleading should be read generously with allowance for technical deficiencies.

• Matters of law that are novel or unsettled in the jurisprudence should be allowed to proceed.

• For a claim to be dismissed, it must be plain and obvious that the plaintiff has no chance of success.

38The plain and obvious test sets a low bar. Nevertheless, the requirement that the pleadings disclose a reasonable cause of action mandates a careful review of the pleading in issue. It is not a perfunctory exercise.

39The plaintiff alleges in the Fresh as Amended Statement of Claim, inter alia:

• MDG has accumulated an enormous customer base across Ontario consisting of tens of thousands of consumers who have entered into agreements for the lease of HVAC equipment.

• Home Trust entered into agreements with MDG by which it formally acquired and became party to MDG’s agreements with class members. Once the agreements were acquired, Home Trust exercised the full range of its purported rights pursuant to the agreements. It became the recipient of payments made by customers under the agreements including unconscionable buyout and termination penalties.

• Home Trust is in substance a first party supplier of the lease agreements at issue to the class members as the joint business partner of MDG. Through that joint business relationship, Home Trust frequently acquired and took assignments of lease agreements directly from MDG. Accordingly, Home Trust is a “supplier” for purposes of the Consumer Protection Act, 2002.

• Home Trust and MDG conspired and agreed together to engage in unlawful agreements with Ontario consumers in order to originate and share unlawful revenue and profits at the expense of those consumers.

• The defendants operate the business enterprise on a joint and coordinated basis.

• The standard form agreement used by MDG and Home Trust with class members fails to make disclosure of

o the fair market retail value of the equipment supplied

o the full cost of the lease agreement

o the implicit finance charge associated with the lease

o the lease value of the leased goods.

• The agreements are structured so that they do not contain, reveal or disclose to the consumer the fundamental economic metrics of the transaction.

• Once the contracts were entered into, MDG and/or Home Trust improperly and without legal authority filed security registrations against class members and their properties to secure the equipment, the stream of lease payments payable and performance by the consumer of obligations under the agreement.

• The deficiencies in the defendants’ agreements with consumers render the agreements unlawful and unenforceable entitling class members to remedies under the Consumer Protection Act, 2002.

• MDG, for itself and as agent for Home Trust, engaged in prohibited unfair practices in the execution of the sales model. The fundamental and universal sales technique employed by the defendants misrepresents that customers will save money on their monthly bills and they will be entitled to cash rebates. Those representations were false and untrue.

• If a class member seeks to terminate the agreement, the defendants demand an exorbitant buyout penalty and termination charge in order to clear the security registration made against title. The buyout charges were not disclosed to class members at the time the contract was entered into or at any time unless a buyout is sought.

• The standard form of agreement contains and is itself a prohibited unfair practice and unconscionable representation which offends ss. 15 and 17 of the Consumer Protection Act, 2002.

• The standard form lease agreements are objectively unconscionable in form and substance.

• The lease agreements fail to state and disclose:

o the consumer’s actual liability under the lease agreement

o the implicit finance charge of the lease

o the fact that MDG will be removing owned equipment without compensation or other consideration

o the reasonable fair market value of any owned equipment traded in to MDG

o the particular type of security notice to be registered and the consideration provided for it

o the reasonable fair market value of the goods consumers are to receive.

• MDG and/or Home Trust demand punitive termination and buyout payments from class members when a termination request is made. The payments demanded are not provided for or authorized by the agreements. The failure to disclose material facts renders the agreements deceptive contrary to ss. 14 and 17 of the Consumer Protection Act, 2002.

• MDG’s company website contains material misrepresentations as to the benefits consumers will obtain.

• The lease agreements breach the requirements of ss. 14 and 17 of the Consumer Protection Act, 2002 on their face.

• The lease agreements are subject to prescribed disclosure requirements under s. 74 of O. Reg 17/05. Those disclosure requirements have not been met.

• The agreements also qualify as direct agreements and future performance agreements for the purposes of the Consumer Protection Act, 2002. As such, all material terms are required to be in writing and disclosure is required. The agreements fail to comply with the prescribed disclosure under s. 35(1) of O. Reg 17/05.

• Water heater rental agreements became subject to additional regulatory requirements effective April 1, 2015. The defendants failed to comply with those requirements.

• The defendants structured their agreements with class members in a manner that is false and misleading in material respects in order to prevent disclosure of the fundamentally unconscionable economic metrics of the transaction. The defendants’ conduct is contrary to s. 52 of the Competition Act which gives rise to a claim pursuant to s. 36 of that Act.

• The defendants have been unjustly enriched to the detriment of the class to the extent that they have charged and retained unlawful fees, interest and other amounts under the agreements with consumers.

• The agreements between class members and the defendants are unconscionable at common law and should not bind any consumer who was party to same. There was a profound inequality of bargaining power. Consumers were misinformed, misled and presented with information that concealed the unconscionable terms of the agreement.

40Home Trust accepts that the Fresh as Amended Statement of Claim discloses a cause of action. Home Trust submits, however, that there is no tenable cause of action against it under the Consumer Protection Act, 2002. It is not a “supplier” as defined in that Act. There is no contract directly between Home Trust and consumers. There is no allegation that Home Trust sells, leases, trades or in any manner supplies goods or services to consumers; rather, the pleading alleges that MDG does so. Home Trust is not and could not be an agent of MDG. It is merely a lender.

41Section 1 of the Consumer Protection Act, 2002 defines “consumer agreement”, “services” and “supplier” as follows:

“consumer agreement” means an agreement between a supplier and the consumer in which,

(a) the supplier agrees to supply goods or services for payment, or

(b) the supplier agrees to provide rewards points to the consumer, on the supplier’s own behalf or on behalf of another supplier, when the consumer purchases goods or services or otherwise acts in a manner specified in the agreement;

“services” means anything other than goods, including any service, right, entitlement or benefit;

“supplier” means a person who is in the business of selling, leasing or trading in goods or services or is otherwise in the business of supplying goods or services, including the supply of rewards points, and includes an agent of the supplier and a person who holds himself out to be a supplier or an agent of the supplier”

42It is clear from the pleading that the plaintiff alleges that Home Trust and MDG are more than mere lender/borrower: they are engaged in a joint business venture through which contracts are signed with consumers by MDG. Those contracts are assigned to Home Trust who takes security against title, receives payments, and deals with customers directly as it relates to terminations and buyouts. The plaintiff alleges that MDG is Home Trust’s agent to originate and source agreements giving rise to a revenue stream.

43The appropriate characterization of the relationship between Home Trust and MDG cannot be determined at this stage. Further, whether the dealings by Home Trust with customers after the contracts are entered into constitute services “supplied” under the Consumer Protection Act, 2002 in the circumstances alleged here cannot be resolved at this stage. It cannot be said that there is no tenable claim.

44The pleading comprises 47 pages and 161 paragraphs. The allegations of fact are presumed true or capable of being proven to be so. The various causes of action listed above are made out on the facts alleged. In other words, it cannot be said at this stage that the claim(s) asserted have no chance of success at trial save as indicated below.

45At various points in the pleading, the plaintiff asserts that as a consequence of the defendant(s)’ wrongful acts and omissions, class members are entitled to rescission among other relief (see paras. 42, 67, 76, 134, and 135). Home Trust submits that the case law is clear that rescission under s. 18 of the Consumer Protection Act, 2002 is not available as a remedy where the goods in question cannot be returned in their original condition: Quenneville v. Volkswagen Group Canada Inc., 2017 ONSC 2448 at para. 4; Ramdath v. George Brown College of Applied Arts and Technology, 2015 ONCA 921 at paras. 80-81; Wright v. United Parcel Service Canada Ltd., 2011 ONSC 5044 at para.358.

46Subsections 18(1) and (2) of the Consumer Protection Act, 2002 state:

(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;

(b) because rescission would deprive a third party of her right in the subject matter of the agreement that the third party has acquired in good faith and for value.

47Section 18(14) states:

(18) When a consumer rescinds an agreement under subsection (1), such rescission operates to cancel, as if they never existed,

(a) the agreement;

(b) all related agreements;

(c) all guaranties given in respect of money payable under the agreement;

(d) all security given by the consumer or a guarantor in respect of money payable under the agreement;

(e) all credit agreements, as defined in Part VII, and other payment instruments, including promissory notes,

(i) extended, arranged or facilitated by the person with whom the consumer reach the agreement, or

(ii) otherwise related to the agreement.

48Although Home Trust suggests that it is an innocent, good faith third party that acquired security in the rental equipment for value, the allegations contained in the Fresh as Amended Statement of Claim squarely put Home Trust’s good faith in issue. Rescission is not foreclosed by s. 18(2)(b) on this pleading.

49However, the HVAC equipment rented by MDG to consumers has almost certainly and universally been used by consumers following installation. Like the Volkswagen cars driven after purchase in Quenneville, consumers are not in a position to return the goods in their original condition. I agree that rescission is not available and should be struck.

50I note that s. 93(1) of the Consumer Protection Act, 2002 provides that a consumer agreement is not binding on the consumer unless the agreement is made in accordance with the Act and the regulations. That broad principle is modified by subsection (2) which states:

(2) Despite subsection (1), a court may order that a consumer is a bound by all or a portion or portions of a consumer agreement, even if the agreement has not been made in accordance with this Act or the regulations, if the court determines that it would be inequitable in the circumstances for the consumer not to be bound.

51Thus, while rescission under s. 18 may be foreclosed by use of the HVAC equipment by class members, s. 93(2) provides a very broad discretion in the court to negate or void all or parts of the rental agreement. If so, the defendants’ right to payments, to register NOSI’s on title or to enforce same could be impacted. A remedy circumscribing the terms of the agreement that is short of complete rescission of the contract may be available.

52In any event, although rescission is not available as a remedy, that does not mean that any of the causes of action asserted must fail. It merely limits the remedy that flows from successful prosecution of the cause of action.

53Finally, Home Trust also submits that the claim for a constructive trust should be struck because a constructive trust is not possible. There is no specific asset or property to attach to. This argument was advanced in oral submissions dealing with common issues.

54In Pro-Sys, the Supreme Court of Canada dealt with the availability of a claim for constructive trust. At para. 92, Rothstein J. wrote:

92In the present case, there is no referential property; Pro-Sys makes a purely monetary claim. Constructive trusts are designed to “determine beneficial entitlement to property” when “a monetary award is inappropriate or insufficient” (Kerr, at para. 50). As Pro-Sys’s claim neither explains why a monetary award is inappropriate or insufficient nor shows a link to specific property, the claim does not satisfy the conditions necessary to ground a constructive trust. On the pleadings, it is plain and obvious that Pro-Sys’s claim that an amount equal to the overcharge from the sale of Microsoft operating systems and Microsoft applications software in British Columbia should be held by Microsoft in trust for the class members cannot succeed. The pleadings based on constructive trust must be struck.

55The relevant provisions of the Fresh as Amended Statement of Claim are paragraphs 154 – 155. In a nutshell, the plaintiffs seek to have all monies paid by class members put into a constructive trust notwithstanding that monthly payments have been ongoing since 2012 and there is no allegation that those funds are held separate and apart or have been used to acquire a particular asset.

56I agree with the defendant that this portion of the claim should be struck. The essence of the plaintiff’s claim is for damages and other relief under the Consumer Protection Act, 2002, not an interest in property.

57Thus, I find that the s. 5(1)(a) CPA criterion is satisfied.

s. 5(1)(b) – Identifiable Class

58The following principles apply to the identifiable class criterion:

1. The class definition should not be merits based;

2. Membership in the class should be determinable by objective criteria;

3. Not every class member need have a provable claim or recover to the same degree;

4. There must be a rational relationship between the class, the causes of action and common issues; and

5. The class definition must not be unnecessarily broad or over-inclusive.

(See Hollick v. Metroploitan Toronto (Municipality), 2001 SCC 68 at paras. 20-21; Cloud v. Canada (Attorney General) (2004), 2004 CanLII 45444 (ON CA), 73 O.R. (3d) 401 (ON CA) at paras. 45-46; Das v. George Weston Limited, 2017 ONSC 4129 at para. 610; Tiboni v. Merck Frosst Canada Ltd., 2008 CanLII 37911 (ON SC), [2008] O.J. No. 2996 (S.C.J.) at para. 78.)

59The threefold purpose of a class definition is to:

1. identify persons who have a potential claim for relief against the defendants;

2. define the parameters of the lawsuit so as to identify those persons bound by the result; and

3. describe who is entitled to notice: Bywater v. Toronto Transit Commission, [1998] O.J. No. 4913 (Ont. Gen. Div.).

60There are approximately 12,500 consumers who entered into approximately 17,057 rental agreements with MDG. The numerosity requirement is satisfied.

61The proposed class definition is set out at paragraph 23 above.

62The first and third paragraphs of the proposed class definition are readily understandable and are based on objective facts. With respect to the second paragraph which refers to lease agreements sold to Home Trust pursuant to Program Agreements, it is unlikely that most class members would be aware of the Program Agreements or whether their lease agreement was sold by MDG pursuant to those agreements. That paragraph introduces uncertainty for class members looking to ascertain whether they are in or out of the class. It is unnecessary in any event. In oral submissions, plaintiff’s counsel agreed that nothing would be lost by deleting that paragraph.

63The balance of the proposed class definition is rationally connected to the causes of action asserted and the common issues which focus largely on the contracts and their compliance or non-compliance with the Consumer Protection Act, 2002.

64Home Trust submits that the claim period covered by the class definition is overbroad since it extends to contracts going beyond two years from the date the action was commenced. I pause to observe that:

a. Although MDG has pleaded a limitation defence in its Statement of Defence at para. 20, Home Trust has not;

b. The plaintiff has pleaded the doctrine of fraudulent concealment and doctrine of discoverability. He has specifically alleged that any applicable statute of limitation has been tolled by the defendants’ knowledge, concealment and denial of facts which prevented the plaintiff and class members from discovering their causes of action;

c. Documentation relevant to the claims asserted was not in the possession of class members, e.g. the Program Agreements between MDG and Home Trust. Those documents have been obtained after the action was commenced through case management directions;

d. Although some putative class members have ended the contracts through buyouts or termination, the vast majority of contracts are ongoing. Notices of security interests remain registered against titles; and

e. The Consumer Protection Act, 2002 does not contain an express limitation period. There is a notice requirement that can be waived by the court.

65In my view, consideration of the limitation period at the certification stage in this case is premature. In Cloud v. Canada (Attorney General), [2004] O.J. No. 401 (Ont. C.A.), Goudge J.A. for the court wrote at para. 61:

61Equally the respondent’s assertion of limitations defences does not undermine the finding of common issues. In the context of these issues, these defences must await the conclusion of the common trial. They can only be dealt with after it is determined whether there were breaches of the systemic duties alleged and over what period of time and when those breaches occurred. Only then can it be concluded when the limitations defence arose. Moreover, because an inquiry into discoverability will undoubtedly be a part of the limitations debate and because that inquiry must be done individual by individual, these defences can only be addressed as part of the individual trials following the common trial. As with other individual issues, the existence of limitations defences does not negate a finding that there are common issues.

66I appreciate that the context of the above quoted passage was in relation to the existence of common issues; however, the rationale underpinning that approach applies in this case. (See also Godfrey v. Sony Corporation, 2017 BCCA 302 at para. 63 quoting MacQueen v. Sydney Steel Corporation, 2011 NSSC 484 at para. 73.) The applicability of a limitation period is best addressed at the individual issues trial stage.

67Finally, counsel for Home Trust advised that MDG ceased marketing rental of equipment in August 2016 after charges were laid against MDG under the Consumer Protection Act, 2002. He suggests that the end date for the claim period be August 31, 2016.

68There is no evidence that MDG resumed its sales activities after it announced on its web-page that it was suspending marketing of rental of HVAC equipment. To err on the safe side, I fix the end date for the claim period at December 31, 2016.

69The identifiable class criterion is met. The class definition is:

“All persons in Ontario who are or were at any time party to a lease agreement of equipment with MDG Newmarket Inc. O/A Ontario Energy Group entered into between May 1, 2012 and December 31, 2016.

“Equipment” means furnaces, air conditioners, water heaters, water softeners, water purification systems, boilers, air cleaners, humidifiers, chimney liners, filters, and other equipment or services offered under the lease agreements.”

s. 5(1)(c) – Common Issues

70Perell J. provides the following summary of the general principles applicable to the common issues criterion at paras. 618 – 623 in Das:

618. … For an issue to be a common issue, it must be a substantial ingredient of each class member’s claim and its resolution must be necessary to the resolution of each class member’s claim: Hollick v. Toronto (City), supra at para. 18.

619. With regard to the common issues, success for one member must mean success for all. All members of the class must benefit from the successful prosecution of the action, although not necessarily to the same extent. The answer to a question raised by a common issue for the plaintiff must be capable of extrapolation, in the same manner, to each member of the class. See: Western Canadian Shopping Centres Inc. v. Dutton, supra at para. 40; Wuttunee v. Merck Frosst Canada Ltd., 2009 SKCA 43 (Sask. C.A.) at paras. 145 – 46 and 160; leave to appeal to S.C.C. refused, (2009), [2008] S.C.C.A. No. 512 (S.C.C.); McCracken v. Canadian National Railway, 2012 ONCA 445 (Ont. C.A.) at para. 183.

620. In Pro-Sys Consultants Ltd. v. Microsoft Corp., supra at para. 106, the Supreme Court of Canada describes the commonality requirement as the central notion of a class proceeding, which is that individuals who have litigation concerns in common ought to be able to resolve those common concerns in one central proceeding rather than through an inefficient multitude of repetitive proceedings.

621. The common issue criterion presents a low bar: Carom v. Bre-X Minerals Ltd. (2000), 2000 CanLII 16886 (ON CA), 51 O.R. (3d) 236 (Ont. C.A.) at para. 42; Cloud v. Canada (Attorney General), supra at para. 52; 2038724 Ontario Ltd. v. Quizno’s Canada Restaurant Corp., 2009 CanLII 23374 (ON SCDC), [2009] O.J. No. 1874 (Ont. Div. Ct.), aff’d 2010 ONCA 466, [2010] O.J. No. 2683 (Ont. C.A.), leave to appeal to SCC refused (2011), [2010] S.C.C.A. No. 348 (S.C.C.).

622. An issue can be a common issue even if it makes up a very limited aspect of the liability question and even though many individual issues remain to be decided after its resolution: Cloud v. Canada (Attorney General), supra. A common issue need not dispose of the litigation; it is sufficient if it is an issue of fact or law common to all claims and its resolution will advance the litigation for (or against) the class: Harrington v. Dow Corning Corp., 2000 BCCA 605 (B.C.C.A.), aff’g 1996 CanLII 3118 (BC SC), [1996] B.C.J. No. 734 (B.C.S.C.), leave to appeal to SCC ref’d. [2001] S.C.C.A. No. 21 (S.C.C.).

623. In the context of the common issues criterion, the some-basis-in-fact standard involves a two-step requirement that: (1) the proposed common issue actually exists; and (2) the proposed issue can be answered in common across the entire class: Hollick v. Toronto (City), supra; Fulawka v. Bank of Nova Scotia, 2012 ONCA 443 (Ont. C.A.); McCracken v. Canadian National Railway Company, supra; Williams v. Canon Canada Inc., supra; Martin v. Astrazeneca Pharmaceuticals PLC, 2012 ONSC 2744 (Ont. S.C.J.);Good v. Toronto Police Services Board, 2014 ONSC 4583 (Ont. Div. Ct.); Dine v. Biomet Inc., 2015 ONSC 7050 (Ont. S.C.J.), aff’d 2016 ONSC 4039 (Ont. Div. Ct.).

71As mentioned above, Home Trust accepts that there are common issues and takes no objection to certain of the proposed common issues framed by the plaintiff and MDG (see para. 31 above). I agree that those issues are common issues although I change the reference to “defendants’ agreements” in (a) and (h) to “rental agreements” as more neutral.

72In oral submissions, Home Trust asked that I add the following as a common issue: “Is Home Trust a “supplier” within the meaning of and for the purposes of the Consumer Protection Act, 2002?” I agree that is an appropriate common issue.

73Proposed common issues (a) and (b) focus on whether the rental agreements comply with the Consumer Protection Act, 2002 and, if not, what remedies flow from non-compliance. They fail to address who is liable and in what capacity. MDG is a named party to the agreements and it is undisputed that MDG is a “supplier” under the Act. Home Trust is not a named party to the rental agreement and disputes that it took an assignment of the agreement as opposed to an assignment of the revenue stream for 60 months. It disputes that it was ever in a direct contractual relationship with class members and that it provided services to them. Determination of common issues (a) and (b) will not resolve that issue.

74Similarly, common issue (h) asks whether the rental agreements and/or MDG’s sales and marketing representations constitute false and misleading misrepresentations contrary to s. 52 of the Competition Act. First, the word “written” should be added in front of sales and marketing representations to be consistent with common issue (c), and to clarify that representations made orally by door-to-door salespersons are not covered by this issue.

75Second, this proposed common issue likewise does not address the nature and extent of Home Trust’s relationship to class members under the agreements. It does not resolve the nature of the relationship between the defendants. Is MDG an agent for Home Trust? Is this a joint business venture? Is Home Trust liable to class members for the shortcomings in the agreement and/or MDG’s written sales and marketing representations?

76The nature of the business relationship between the defendants is ideal for resolution in a common issues trial. The focus will be on the defendants, their agreements and their conduct. Simply answering whether the agreements and/or MDG’s written marketing materials are false and misleading misrepresentations leaves open whether liability rests solely with MDG.

77Therefore, I add the following common issue: “If the rental agreements and/or written sales and marketing representations are false and misleading misrepresentations contrary to s. 52 of the Competition Act, are both defendants liable for same?”

78I will now focus on the remaining proposed common issues in the same order as they are found in para. 30 above.

Proposed Common Issue (b): If the defendants’ agreements fail to comply with the requirements of the Ontario Consumer Protection Act, 2002, are the class members entitled to a declaration that:

i. remedies under section 18 of that Act are available to them;

ii. the defendants’ agreements are not binding on the class members pursuant to section 93(1) of that Act; and/or

iii. remedies under another section of that Act are available to them?

79Home Trust takes the following positions regarding this proposed issue:

1. If the question posed merely seeks a declaration that there are remedies under the Act, it is too general.

2. The determination of a remedy under s. 93 requires consideration of the effects of the breach on individual class members.

3. Damages cannot be assessed on an aggregate basis in this case.

4. If (iii) is reworded to ask under which provision of the Act or Regulation damages should be calculated, that would assist the parties and court for individual assessments.

80The plaintiff submits that:

1. This common issue merely sets out the three categories of remedy available under the Consumer Protection Act, 2002 and regulations.

2. Damages under s. 18(2) of the Act are not restricted to a tort measure where rescission is not available. A restitutionary approach is an option.

3. The nature and scope of the breach will inform the choice of remedy per Weller v. Reliance Home Comfort Limited Partnership, 2012 ONCA 360 at para. 19.

4. Aggregate damages under s. 24 of the Class Proceedings Act, 1992 is a viable approach in this case.

81It is helpful for context to provide an overview of the obligations under the Act and regulations and the various remedies available pursuant to same.

82The Consumer Protection Act, 2002 is divided into Parts. Part III deals with unfair practices which are prohibited by s.17(1). A person who performs an act referred to in ss. 14-16 is deemed to have engaged in an unfair practice. Section 14(1) provides that the making of a false, misleading or deceptive representation is an unfair practice. Subsection 14(2) enumerates a non-exhaustive list of the kinds of behaviour that will constitute a false, misleading and deceptive representation. Item 14 states:

14. A representation using exaggeration, innuendo or ambiguity as to a material fact or failing to state a material fact if such use or failure deceives or is intended to deceive.

83Section 18 sets out the remedies available to a consumer who is the victim of an unfair practice. I have already set out in full subsections 18(1) and (2) above (see para. 46). Subsection (12) provides that each person who engaged in the unfair practice is jointly and severally liable with the person who entered into the agreement with the consumer. Subsection (13) limits the liability of assignees:

(13) If an agreement to which subsection (1) or (2) applies has been assigned or if any right to payment under such agreement has been assigned, the liability of the person to whom it has been assigned is limited to the amount paid to that person by the consumer. [Italics added.]

84Thus, if MDG engaged in an unfair practice contrary to the Act, Home Trust is potentially at risk to the extent it has received payments from consumers pursuant to the assignments of monthly payments by MDG even if, as it contends, Home Trust is merely a lender.

85Section 18 is the remedy provision for unfair practices under Part III of the Act. It does not apply to a breach of the disclosure requirements found in other Parts in the Act unless the court finds that failure to disclose amounts to an unfair practice.

86Part IV of the Act deals with rights and obligations for specific types of consumer agreements. This includes direct agreements and future performance agreements. A direct agreement is a consumer agreement negotiated or concluded in person at a place other than the supplier’s place of business or other place of business such as a market. An agreement concluded in a consumer’s home is a direct agreement.

87Future performance agreements are not a defined term. Sections 22 – 26 apply to future performance agreements if the consumer’s total potential payment obligation under the agreement, excluding the cost of borrowing, exceeds a prescribed amount. Future performance agreements are required to be in writing, delivered to the consumer and made in accordance with prescribed requirements found in the regulations.

88Section 35(1) of O. Reg 17/05 sets out the mandatory requirements for a direct agreement. This includes the rights that the consumer will have in relation to cancellation, and any other restrictions, limitations and conditions imposed by the supplier.

89Part VIII of the Act deals with leasing. It is undisputed that this portion of the Act applies to the subject HVAC equipment rental agreements. The plaintiff maintains that the leases are also direct agreements and the provisions related to same also apply since at least April 1, 2015.

90Section 89 requires the lessor to deliver a disclosure statement for a lease before the earlier of the time the lessee enters into the lease and the time the lessee makes a payment under the lease.

91Section 74 of O. Reg 17/35 prescribes the information that must be disclosed to a consumer for a lease that is subject to Part VIII of the Act. The information includes:

• the lease value of the goods (Item 4);

• the capitalized amount (Item 8);

• the estimated residual value of the leased goods (Item 9);

• the circumstances, if any, in which the lessee may terminate the lease before the end of the lease term (Item 13);

• the amount or, if the amount cannot be determined at the time of disclosure, the manner of determining the amount of the payments, if any, that the lessee is required to make on early termination of the lease (Item 14);

• the circumstances, if any, in which the lessee is required to make a payment in connection with the lease that is not disclosed under the preceding paragraphs and the manner of determining the amount of the payment (Item 15);

• the implicit finance charge (a defined term) for the lease (Item 16);

• the total lease cost (Item 18).

I am mindful that the defendants dispute that the disclosure requirements under these various provisions apply and/or have not been adequately satisfied.

92The plaintiff alleges that the contracts signed by class members with MDG do not contain the required disclosure nor did MDG or Home Trust provide that information by separate disclosure.

93Section 75 of O. Reg 75/05 sets out the consequences of non-disclosure. It states:

75. A lessee is not liable to pay the lessor,

(a) the implicit finance charge for the lease, if the lessee does not receive a disclosure statement for the lease as required under subsection 89(1) of the Act; or

(b) any amount in excess of the amounts specified as the implicit finance charge for the lease in the disclosure statement received by the lessee.

94Part IX of the Act contains consumer remedies for breaches of the Act and regulations that are not unfair practices: s. 91. As indicated earlier, s. 93(1) provides that a consumer agreement is not binding on the consumer if not made in accordance with the Act and regulations. Subsection (2) allows the court to moderate that impact by holding the consumer liable to all or part of the agreement if it would be inequitable for the consumer not to be bound.

95Section 98 permits a consumer to bring an action for recovery of payment of fees to a supplier in contravention of the Act. There is a notice provision.

96Section 100 permits the consumer to bring an action in the Superior Court of Justice for breach of the Act. Subsection (2) states:

(2) If a consumer is successful in an action, unless in the circumstances it would be inequitable to do so, the court shall order that the consumer recover,

(a) the full payment to which he or she is entitled under this Act; and

(b) all goods delivered under a trade-in arrangement or an amount equal to the trade-in allowance.

97Finally, the court may also order exemplary or punitive damages or such other relief as it considers proper in addition to that under subsection (2): see s. 100(3). Thus, the Court has very broad remedial power under the Act.

98The Act and regulations provide a range of possible remedies depending on the nature of the breach and the provision breached. Section 18 remedies are limited to unfair practices. The same conduct could conceivably be both an unfair practice and a breach of the Act or regulations giving rise to remedies under the other provisions. What remedy should follow if the defendant(s) is found to have breached the Act will depend on the findings made by the trial judge as to the breach and the significance of the breach.

99I agree that there is no need for the trial judge to declare that s. 18 remedies are available to class members. That result follows from a finding of unfair practice. However, the trial judge is best positioned to identify which of the remedies contemplated by section 18 should apply and what limitations on that remedy are engaged; e.g, whether Home Trust is merely an assignee and the extent of its liability is limited by s. 18(13). I agree with the defendant that the common issue should be reframed.

100With respect to (ii) of this proposed common issue, Home Trust submits that the critical factor under s. 93(2) of the Consumer Protection Act, 2002 is not the nature of the breach, but whether it would be inequitable for the consumer to be bound to the agreement. That determination requires an examination of the effects of the breach on each consumer. Home Trust relies on the decision of the Court of Appeal in Weller; in particular, para. 19.

101In Weller, Rosenberg J.A. wrote at para. 19:

… The test for application of the proviso [s.93(2)] is not the nature of the defective compliance but whether it would be inequitable for the consumer not to be bound. Obviously, in deciding whether it would be inequitable, the court will take into account the nature of the non-compliance, and the more substantial the deviation from the legislative scheme the more likely it will be that the court will find it would not be inequitable for the consumer not to be bound to the agreement.

102I do not understand the dicta of Justice Rosenberg to necessitate an individualized inquiry of the effects on the consumer of the non-compliance. Weller was not a class proceeding. The court was not concerned with common issues. In my view, a trial judge may well be able to determine on a class-wide basis whether it would be inequitable that class members not be bound by the agreements or parts of them. The trial judge may well find that holding the entire agreement to be non-binding goes too far. That is what section 93(2) addresses.

103As I read this proposed common issue, the plaintiff simply seeks direction from the trial judge as to the appropriate remedy that arises from the breach(es) of the Act and regulations. It is for the trial judge to determine whether damages or loss should be measured on a tort or restitutionary basis. I agree that it is entirely premature to fix that approach at this stage.

104With respect to whether the damages under the Consumer Protection Act, 2002 can be determined on an aggregate basis under section 24 of the Class Proceedings Act, 1992, I will address that issue when I deal with proposed common issue (g) below.

105Therefore, I reframe this issue as follows: “If the rental agreements fail to comply with the requirements of the Consumer Protection Act, 2002, what are the appropriate remedies under the Act and regulations or at common law?”.

Proposed Common Issue (d): If so, are the class members entitled to remedies pursuant to s. 18 of that Act?

106This common issue asks what remedies follow from a finding that MDG’s written sales and marketing representations on its website and elsewhere constitute unfair practices under the Consumer Protection Act, 2002. For the same reasons expressed above, this issue is one that should be reframed as follows: “If so, what is the appropriate remedy under s. 18 of the Act?”.

Proposed Common Issue (e): If the class members are entitled to remedies, what should the protocol for the implementation of remedies be?

Proposed Common Issue (f): Should an equitable accounting be ordered to facilitate the construction of a remedial protocol for class members?

Proposed Common Issue (g): Can all or part of that remedies protocol be determined on an aggregate or automated basis pursuant to ss. 12, 24, 25 and 26 of the Class Proceedings Act?

107I have grouped these three issues together as they relate to remedies and the process to be utilized if the plaintiff is successful in establishing liability for one or both defendants. I will deal first with aggregate damages.

108The first question is whether aggregate damages can be a common issue given that the limitations issue is deferred to the individual issues stage. In Serhan Estate v. Johnson & Johnson (2006), 2006 CanLII 20322 (ON SCDC), 269 D.L.R. (4th) 279, 28 C.P.C. (6th) 83 (Div. Ct.) at para. 137, the Divisional Court confirmed that a question relating to aggregate damages should not be included as a common issue if, at the certification stage, the court can determine that one or more of the three prerequisites of s. 24 of the Class Proceedings Act, 1992 could not be satisfied even if the plaintiff succeeded on the other common issues.

109Section 24(1) of the Class Proceedings Act, 1992 states:

(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; and

(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.

110The requirement in s. 24(1)(b) will be met when the liability of the defendant to at least some members of the class will be established through the resolution of the common issues: Fulawka v. Bank of Nova Scotia, 2012 ONCA 443at paras. 123 and 124.

111The defendant, MDG, has pleaded a limitation defence which is an individual issue that potentially precludes liability to some members of the class. Certainly, this is not a case where the limitation period defence affects all members of the class. It is undisputed that a significant number of contracts were signed within two years of the date the statement of claim was issued.

112In my view, the s. 24(1)(b) condition is satisfied for at least some members of the class. It is open to the trial judge to determine whether to proceed with an aggregate assessment of damages for those members of the class not subject to the limitation defence.

113I note that the plaintiff has pleaded the doctrine of equitable fraud or fraudulent concealment. Since argument of this motion, the Supreme Court of Canada has released its decision in Pioneer Corp. v. Godfrey, 2019 SCC 42 in which the court addresses the doctrine of fraudulent concealment as it applies to limitation periods. The plaintiff has not sought to certify fraudulent concealment as a common issue. No submissions were made. Whether fraudulent concealment could or should be a common issue in this action is an open question. If it was a common issue, its resolution, if favourable to the plaintiff, might well permit the trial judge to proceed with an assessment of aggregate damages for the entire class.

114In any event, the appropriateness of aggregate damages will be determined by the trial judge whether or not certified and only after liability has been determined.

115In Pro-Sys Consultants Ltd. v. Microsoft Corporation 2013 SCC 57, Rothstein J. for a unanimous court wrote at para. 134:

134The question of whether damages assessed in the aggregate are an appropriate remedy can be certified as a common issue. However, this common issue is only determined at the common issues trial after a finding of liability has been made. The ultimate decision as to whether the aggregate damages provisions of the CPA should be available is one that should be left to the common issues trial judge. Further, the failure to propose or certify aggregate damages, or another remedy, as a common issue does not preclude a trial judge from invoking the provisions if considered appropriate once liability is found.

116In Ramdath v. George Brown College of Applied Arts and Technology, the certification motion judge initially declined to certify aggregate damages: see 2010 ONSC 2019 at para. 120. At the conclusion of the common issues trial on liability, the trial judge determined that the preconditions in s. 24(1) of the Class Proceedings Act, 1992 were met and aggregate damages should be assessed for some but not all categories of loss: 2014 ONSC 3066 at para. 6.

117The plaintiffs’ claim for damages in Ramdath was under section 18(2) of the Consumer Protection Act, 2002. At para. 16, Justice Belobaba noted that an unfair practice claim under the Act, unlike common law misrepresentation, does not require the plaintiffs to prove that class members relied on the representation or that the representation induced them to enter into the agreement.

118At para. 1 of his decision, Justice Belobaba wrote:

1Aggregate damages are essential to the continuing viability of the class action. If all or part of the defendant’s monetary liability to class members can be fairly and reasonably determined without proof by individual class members, then class action judges should do so routinely and without hesitation. Aggregate damage awards should be more the norm, than the exception. Otherwise, the potential of the class-action for enhancing access to justice will not be realized.

119The defendant appealed his decision with respect to aggregate damages to the Court of Appeal: 2015 ONCA 921. Justice Feldman wrote at para. 76:

76I 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 the both sides are treated fairly by the assessment:

1. whether the non-individualized evidence presented by the plaintiff is sufficiently reliable;

2. 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

3. 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.

120Home Trust argues that the plaintiff has failed to provide some evidence in fact that there is a workable methodology for resolving causation and damages on a class-wide basis as required: Bennett v. Hydro One Inc., 2017 ONSC 7065. The evidence provided by the plaintiff, particularly the approach of its expert, Dr. Douglas Cumming, is fundamentally flawed; so much so, that it must be disregarded.

121Dr. Cumming is a tenured professor of Finance and Entrepreneurship at York University’s Schulich School of Business in Toronto. He has a Ph.D. in Economics. Dr. Cumming was asked by plaintiff’s counsel to, inter alia,

1. calculate the total lease cost and total amount payable by each consumer pursuant to lease agreements provided by counsel;

2. opine as to the economic implications of the contractual annual increase language in the lease agreements;

3. calculate, if possible, the implicit finance charge and fair market value of the leased goods based on the lease agreements.

122The agreements contain a clause which permits MDG to increase the monthly payment by at least 3.8% annually upon written notice to the consumer. Dr. Cumming calculated the impact of that increase, if taken, over the expected term of the lease, 15 years. He also calculated the total amount of the lease payments over that period. He was unable to calculate the fair market value of the equipment since that information is not disclosed in the agreement and is known only to the defendants. As a result, he could not calculate the implicit finance charge.

123Implicit finance charge is a defined term in s. 72(1) of O. Reg 17/05. It is essentially a mathematical formula based on specified inputs. With the fair market value of the equipment, the implicit finance charge is readily ascertainable. This is evident from the responding expert affidavit of Gord Potter.

124Home Trust submits that the implicit finance charge methodology employed by Dr. Cumming, as directed by plaintiff’s counsel, uses an inappropriate comparator. It looks at the difference between buying and leasing. It assumes no-one would lease despite the benefits of leasing and the clear desire or need on the part of some consumers to do so. There is no evidence offered as to market leasing rates for HVAC equipment generally so as to assess whether the rates charged by MDG are fair or exorbitant. Thus, no workable methodology is in evidence. Use of the plaintiff’s methodology risks unfairness and an overstatement of the defendants’ liability.

125The plaintiff submits that:

1. There are no readily ascertainable leasing market rates. Different suppliers use different contractual wording, offer other features or services, and comply or do not comply with disclosure requirements;

2. The issue here is non-compliance with disclosure obligations that are there to ensure that consumers have the information necessary to make an informed decision about cost of leasing versus buying. The defendants cannot hide behind their non-compliance to shield themselves from damages;

3. I should not tie the hands of the trial judge as to the correct methodology for calculating damages. Each side has its theory. The trial will decide who is correct. There is evidence of a workable methodology to calculate aggregate damages on a class-wide basis.

126I note that Section 75(a) of O. Reg 17/05 specifies the consequence of non-disclosure in respect of a lease governed by Part VIII of the Act (assuming it is not exempt). If there is non-disclosure, the customer is not liable to pay the implicit finance charge. The plaintiff’s methodology is consistent with that provision.

127Further, s. 93(1) provides that an agreement not made in accordance with the Act or regulations is not binding, subject to the court’s discretion to relieve against that effect in (2) where it would be inequitable. However unlikely a result, if the court found the agreements to be non-binding, the amounts already paid by class members could be calculated.

128I am satisfied that the plaintiff has provided some evidence in fact of a workable methodology for determining the damages sustained by members of the class on an aggregate basis. I am mindful of Justice Belobaba’s caution in para. 49 in Ramdath:

49One should also remember that an aggregate damages methodology is reasonable even if some members are overcompensated, while others are under compensated as long as the defendant’s liability has not been overstated.

129With respect to proposed common issues (e) and (f), they simply recognize that if the trial judge determines that he/she is satisfied that aggregate damages be determined for all or part of the defendants’ liability to some or all of the class members, there are tools available to assist the court and parties in that process. Frankly, establishing a protocol and/or requiring an equitable accounting are matters that would be addressed in any event once liability is determined. I am satisfied that these are common issues.

130The issue of aggregate damages arises again in proposed common issues (j), (o) and (r). I will not repeat the analysis above. I am satisfied that the issue of aggregate damages should be certified as a common issue.

Proposed Common Issue (i): If so, can causation of the class members’ losses be proven by the fact of any payments made by them pursuant to the requirements of the rental agreements?

131This issue arises in the context of the claim under the Competition Act which prohibits representations that are false or misleading in a material respect: s. 52. The plaintiff need not prove that the person was deceived or misled to find a breach of s. 52: s. 52(1.1). Section 36 permits a civil action for damages for conduct in breach of s. 52.

132The issue framed addresses causation for damages suffered. I agree that this is a common issue. It is one that, if determined in favour of the class, would resolve causation for all members.

Proposed Common Issue (j): If so, are the class members entitled to remedies pursuant to s. 36 of the Competition Act? Can such remedies be determined on an aggregate basis?

133I have already addressed whether aggregate damages are a common issue - the second question in this proposed common issue. As for the first question, breach of s. 52 gives rise to a claim for damages under s. 36. This is a common issue.

Proposed Common Issue (m): Did class members suffer economic loss as a result of the defendants’ conduct?

Proposed Common Issue (n): If the defendants are liable to the class members in conspiracy, what damages and other remedies are owed to the class members?

134Whether class members suffered an economic loss is a constituent element of liability for civil conspiracy. It does not require that the amount be quantified, only that an economic loss occurred. I do not agree that this necessitates evidence from each class member. If, as the plaintiffs allege, the defendants conspired to get consumers to sign leases without providing proper disclosure, and those leases were signed and payments received, the economic loss may be self-evident.

135Proposed common issue (n) deals with the measure of loss, not the quantification of same. In my view, it is an appropriate common issue. At a minimum, the trial judge may direct the basis on which damages are to be calculated either in aggregate or on an individualized basis.

Proposed Common Issue (q): If the defendants are liable in equity, are the class members entitled to restitution and a constructive trust?

136Given my finding above that a constructive trust is not available, this issue cannot be a common issue.

Proposed Common Issue (s): Are the defendants’ agreements unconscionable contracts as a matter of common law?

Proposed Common Issue (t): If so, are the class members entitled to remedies? If so what remedies are owed?

137This question does not ask whether the contract is unconscionable under the Consumer Protection Act, 2002. Home Trust submits that if the test for unconscionability is the same at common law as it is under the Act, this issue is redundant given the analysis that will be done on the common issues above. On the other hand, if unconscionability at common law is in some way different than that under the Act, it necessitates an individualized inquiry.

138The plaintiff submits that the issue is one which can be determined on a class-wide basis because it focuses on the content of the rental agreement and “its objectively systemic and common context”. The plaintiff submits that even the defendant’s expert, Mr. Mulvey, recognized in his evidence that most homeowners will have little or no experience with HVAC leases and therefore have limited specific knowledge to draw upon in making lease decisions.

139The law with respect to unconscionable transactions and the applicable test is unsettled in Ontario: Heller v. Uber Technologies Inc., 2019 ONCA 1. Depending on the test applied, a plaintiff must establish only unfairness and an imbalance in power, or those elements and lack of advice and knowledge of the opposing party’s vulnerability: Douez v. Facebook, Inc., 2017 SCC 33, [2017] 1 S.C.R. 751 at para. 115; Titus v. William F. Cooke Enterprises Inc., 2007 ONCA 573 at para. 38.

140The plaintiff urges me to find that the law in Ontario requires only proof of unfairness and an imbalance in power. The four-part test in Titus no longer applies. However, as his factum indicates, the Court of Appeal did not address which test is to be applied in Ontario in the Heller decision.

141In Jordan v. CIBC Mortgages Inc., 2019 ONSC 1178, at para. 189, I declined to certify common issues with respect to a claim of unconscionability in the context of a claim related to prepayment penalties found in standard charge terms. In that case, I concluded that borrowers have differing degrees of sophistication. Some may have had the legal, mortgage or accounting advice. The fairness or providence of the transaction could not be determined on a uniform basis.

142I find that the same rationale applies to the proposed common issues in this case. The degree of sophistication of the class members will vary. The extent of their familiarity with rental agreements will differ. Notwithstanding the general observation of Mr. Mulvey, I am not satisfied that this issue can be determined on a systemic basis. I agree that it is an individualized inquiry and not amenable to being a common issue.

143In summary, I am satisfied that the claim raises several common issues. I trust that counsel can use the reasons above to set out the common issues in the certification order.

s. 5(1)(d) – Preferable Procedure

144Section 5(1)(d) of the CPA requires that a class proceeding be “the preferable procedure for the resolution of the common issues.” At first blush, one might believe that the focus of the preferability analysis lies exclusively on the common issues. The case law makes clear that the analysis is broader. The inquiry asks whether a class proceeding would be a fair, efficient and workable procedure for the resolution of the issues, keeping in mind not only the common issues, but the individual issues that will remain after the common issues are resolved: Fairview Donut Inc. v. The TDL Group Corp., 2012 ONSC 1252 at para. 347.

145In Markson v. MBNA Canada Bank, 2007 ONCA 334 (leave to appeal to SCC refused), Rosenberg J.A. summarized the approach to the preferable procedure requirement at paras. 69-70 as follows:

(1) The preferability inquiry should be conducted through the lens of the three principal advantages of a class proceeding: judicial economy, access to justice and behaviour modification;

(2) “Preferable” is to be construed broadly and is meant to capture the two ideas of whether the class proceeding would be a fair, efficient and manageable method of advancing the claim and whether a class proceeding would be preferable to other procedures such as Joinder, test cases, consolidation and any other means of resolving the dispute; and

(3) The preferability determination must be made by looking at the common issues in context, meaning, the importance of the common issues must be taken into account in relation to the claims as a whole.

As I read the cases from the Supreme Court of Canada and appellate and trial courts, these principles do not result in separate inquiries. Rather, the inquiry into the questions of judicial economy, access to justice and behaviour modification can only be answered by considering the context, the other available procedures and, in short, whether a class proceeding is a fair, efficient and manageable method of advancing the claim.

146The court should consider the following factors in assessing preferable procedure:

a. the nature of the proposed common issues;

b. the individual issues that will remain after determination of the common issues;

c. the factors listed in the Act (see s. 6 CPA);

d. the complexity and manageability of the proposed action as a whole;

e. alternate procedures for dealing with the claims asserted;

f. the extent to which certification furthers the objectives underlying the CPA; and

g. the rights of the plaintiffs and defendants: Chadha v. Bayer Inc., (2003), 2003 CanLII 35843 (ON CA), 63 O.R. (3d) 22 (C.A.).

147The proposed representative plaintiff bears the onus of showing there is some basis in fact that a class proceeding is preferable to any other reasonably available means of resolving class member claims. If the defendant relies on a specific non-litigation alternative, the defendant has the evidentiary burden of raising that alternative: Fischer v. IG Investment Management Ltd., 2013 SCC 69 at paras. 48-49.

148Access to justice is one of the underlying goals of the CPA. In Fischer, the Supreme Court of Canada held that access to justice has a procedural and substantive dimension. The procedural aspect looks at whether the claimants have a fair process to resolve their claims. The substantive aspect focuses on the results to be obtained and whether the claimants will receive a just and effective remedy for their claims if established. When considering alternatives to a class-action, the court must ask whether the alternative has the potential to provide effective redress for the substance of the plaintiff’s claims and will do so in a manner that provides suitable procedural rights. The type of remedy sought is a relevant factor.

149The common issues are substantial components of the causes of action asserted in this case. Resolution of those issues will significantly advance the litigation to the advantage of all parties. Depending whether aggregate damages is heard as a common issue, resolution of the common issues may fully and finally resolve the claim in its entirety for some or all class members. Even if the trial judge determines that aggregate damages should not be determined as a common issue, the litigation will be meaningfully advanced. Some individual issues may be redundant as a result of determination of the common issues.

150The class is comprised of thousands of individuals. The amounts in issue per claimant are modest especially in light of the cost of litigation. Absent a class proceeding, many class members would not be able to afford litigation. Certifying this action as a class proceeding will provide access to justice.

151The Consumer Protection Act, 2002 expressly contemplates use of class proceedings as a vehicle for recovery of losses from wrongdoing under the Act: s. 8. There is ample precedent for certification of consumer class proceedings.

152I am satisfied that this action, once certified, will be a “fair, efficient and manageable” method of advancing the litigation. It will avoid potentially thousands of individual actions throughout Ontario with the risk of inconsistent findings and appeals. There is significant judicial economy achieved by certification.

153With respect to deterrence, MDG is no longer marketing HVAC equipment rentals; however, this case has significance for the broader industry. What disclosure requirements apply and what damages flow from breach of those provisions will be of broad interest. The liability of Home Trust, if any, and the basis for same also has implications for lenders.

154Thus, looked at through the lens of the three objectives of class proceedings, certification will achieve or has the potential to achieve access to justice, judicial economy and deterrence.

155No one has suggested that there is an alternate vehicle for resolution of the claims apart from litigation. There is not, for example, an arbitration process under the agreements.

156I have earlier stayed a number of Small Claims Court actions pending the outcome of the certification motion at the request of the defendants. Those individuals may elect to opt out of the class and pursue those claims. By the same token, they may choose to await the outcome of the class proceeding where they would have no exposure to adverse costs or to the cost of their own legal representation.

157I do not see hundreds if not thousands of individual Small Claims Court actions as a preferable procedure. Further, there is no suggestion by the defendants that a test case would be agreeable, nor that joinder would be a viable and preferable procedure.

s. 5(1)(e) – Representative Plaintiff and Litigation Plan

158The last criterion for certification is that there be a representative plaintiff who would adequately represent the interests of the class without a conflict of interest on the common issues and who has produced a workable litigation plan.

159There is no dispute that Mr. Cullaton is an appropriate representative plaintiff. I am satisfied that he meets the requirements of s. 5(1)(e).

160The litigation plan submitted is reasonable and, in any, will evolve as the litigation evolves. The defendants have not objected to same.

Conclusion - Certification

161For the above reasons, I find that this action should be certified as a class proceeding. Counsel should prepare a draft order for my consideration.

Summary Judgment Motion

162The plaintiff seeks partial summary judgment; specifically, the plaintiff seeks a judgment declaring that:

1. The rental agreements fail to comply with the requirements of the Consumer Protection Act, 2002 and regulations including:

i. The “leasing requirements” contained in Part VIII of the Act and any leasing requirements contained in the regulations under the Act;

ii. The obligations respecting “direct agreements” under Part IV of the Act; and

iii. The “unfair practices” provisions contained in ss. 14 and 15 of the Act;

2. The rental agreements are not binding on class members pursuant to s. 93(2) of the Act;

3. Remedies under s. 18 of the Act are available to them.

4. Remedies under other sections of the Act are available to them.

163Further, the plaintiff seeks an order that a subsequent hearing be held forthwith to adjudicate the following issues with respect to remedies:

1. What the protocol should be for implementation of remedies;

2. Should an equitable accounting be ordered to facilitate the construction of a remedial protocol for class members; and

3. Can all or part of the remedies protocol be determined on an aggregate or automated basis pursuant to ss. 12, 24, 25 and/or 26 of the Class Proceedings Act, 1992?

164I understand “leasing requirements” to refer to contractual terms and disclosure mandated by the Act and regulations.

165The motion raises the following overarching question: Is there a genuine issue requiring a trial with respect to:

1. What disclosure obligations applied to the rental agreements during the claim period? This issue requires consideration of the following:

a. Is the rental agreement a lease under Part VIII of the Act?

b. Is the rental agreement a direct agreement under Part IV of the Act?

c. Is the rental agreement a future performance agreement under Part IV of the Act?

d. What exemptions, if any, apply?

2. Did class members receive the applicable required disclosure? Do the agreements on their face comply with the disclosure requirements?

3. If the answer to (2) is “no”, does the inadequate disclosure amount to an unfair practice under ss. 14 and 15 of the Consumer Protection Act, 2002?

4. Is Home Trust a “supplier” under the Act?

5. Is Home Trust an “assignee” under the Act?

6. Is Home Trust entitled by the terms of the rental agreement to register a Notice of Security Interest against title to the real property owned by class members?

166Further, if there is a genuine issue that requires a trial with respect to one or more of the above, should all issues be left to be determined at trial? Is a limited partial summary judgment appropriate? Should partial summary judgment be granted having regard to the remaining common issues to be tried?

Summary Judgment – Law

167Summary judgment motions are governed by r. 20.04 which states:

“(2) The court shall grant summary judgment if,

(a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; …

(2.1) In determining under clause (2) (a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:

1. Weighing the evidence

2. Evaluating the credibility of a deponent

3. Drawing any reasonable inference from the evidence.

(2.2) A judge may, for the purposes of exercising any of the powers set out in subrule (2.1), order that oral evidence be presented by one or more parties, with or without time limits on its presentation.”

168The leading case on summary judgment is Hryniak v. Mauldin, 2014 SCC 7. At para. 66, Karakatsanis J. wrote:

“On the motion for summary judgment under Rule 20.04, the judge should first determine if there is a genuine issue requiring trial based only on the evidence before her, without using the new fact-finding powers. There will be no genuine issue requiring a trial if the summary judgment process provides her with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure, under Rule 20.04(2)(a). If there appears to be a genuine issue requiring a trial, she should then determine if the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2). She may, at her discretion, use those powers, provided that their use is not against the interest of justice. Their use will not be against the interest of justice if they will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.”

169Thus, the judge hearing the summary judgment motion must ask:

1. Based on the evidentiary record alone, are there genuine issues that require a trial?

2. Does the evidentiary record provide the evidence needed to “fairly and justly adjudicate the dispute”?

170In Hryniak, the test for summary judgment was stated at para. 49 as follows:

“There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.”

171The onus of establishing that there is no genuine issue requiring a trial rests on the moving party. Where the moving party establishes that there is no genuine issue requiring a trial, the onus shifts to the responding party to establish that there is a genuine issue requiring a trial: Sweda Farms Ltd. v. L.H. Gray & Son Ltd., 2014 CarswellOnt 11926 (Ont. C.A.) at para. 26; New Solutions Extrusion Corp. v. Gauthier, 2010 ONSC CarswellOnt 913 at para. 12.

172A responding party must set out in affidavit material or other evidence the specific facts that establish that there is a genuine issue requiring a trial. The responding party cannot rest on mere denials of allegations of a party’s pleading: Sweda, para. 27. It is not enough to allude to evidence that may be adduced in the future.

173The judge hearing the motion must:

1. Determine the motion on the pleadings and evidence actually before the court on the motion. The judge is entitled to assume that the record contains all the evidence that would be adduced at trial; and

2. Take a hard look at the evidence and the merits of the action at this preliminary stage: Sweda, paras. 26-28.

174Where a party seeks partial summary judgment, the motion judge must assess the advisability of the summary judgment process in the context of the litigation as a whole: Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450 at paras. 35. The motion judge must consider whether the factual findings necessary to determine the motion are so intertwined with the remaining issues that those determinations on the motion risk inconsistent findings later and substantive injustice: Baywood Homes Partnership, para. 37. Given what remains to be determined, it may be more fair, efficient and just for those findings to be made once in the context of the trial.

175A motion for partial summary judgment is a “rare procedure” that is reserved for an issue or issues that may be readily bifurcated from the remaining issues, and which may be determined in an expeditious and cost-effective manner: Butera v. Chown, Cairns LLP, 2017 ONCA 783 at para. 34.

The Rental Agreement

176The rental agreement signed by Mr. Cullaton on August 1, 2014 is a two-page agreement. The first page has a section for inputting Mr. Cullaton’s personal information such as name and address. It also has two boxes in which the equipment available for lease is listed with a box beside each piece of equipment to be checked off as appropriate; the second box sets out installation and other charges.

177Beside each equipment option is the corresponding monthly rental fee. For example, the monthly rental cost for a 95% ENERGY STAR Qualified High Efficiency Furnace is $69.95. The total monthly rental amount for the three items selected by Mr. Cullaton was $142.85. The installation date was hand-written: 6/8/14.

178The bottom third of the page contains the place for customer signature, date and the OEG (MDG) representative’s name. Just above the signatures, it is difficult to make out but the following appears to be stated:

OEG will be responsible for the removal and disposal/return of your existing equipment. In addition to all lifetime service calls, OEG’s rental program includes preventative maintenance appointments to ensure the equipment continues to operate at manufacturer’s efficiency standards. Your monthly rental charge will be $142.85 plus applicable taxes, and annual increase limited to 3.8%. By signing this Agreement you acknowledge that you have received and will be bound by the Terms and Conditions on the reverse side.

You agree to make all payments on this agreement by preauthorized debit (PAD) to the account showing on the void cheque attached or on any other financial institution with alternate account information which you give to us. All persons who sign on the account must also sign this agreement.

Your Rights Under the Consumer Protection Act, 2002 are set out in the Terms & Conditions on the reverse side of this Agreement. [Italics in original.]

179Page 2 of the agreement is headed “Terms & Conditions”. It is a one size fits all standard terms sheet. The following terms are found on page 2:

2. Terms and Payments: … I agree to rent the equipment from OEG starting from the date this agreement is signed and for the useful life of the equipment estimated to be about 15 years. I understand that I will be billed the monthly payment amount specified on page 1 (with scheduled increases described below) in accordance with the biller’s billing schedule and that he most instances, this will mean one (1) payment per month, billed on my Enbridge bill on the first eligible billing. Following my installation date. I understand that on each annual anniversary of my installation date, my monthly payment is limited to an annual increase of 3.8% of the amount payable in the preceding year or in accordance with Consumer Price Index published for the preceding calendar year, whichever is greater, unless I am otherwise notified.…

3. OEG’s Preventative Maintenance Program: (a) If properly maintained, the anticipated useful life of the equipment is approximately 15 years. I understand that subject to paragraph (b) below, at any time after 1st anniversary of each year following the installation date, for Furnace or Air Conditioner, or at any time after 5th anniversary for conventional/power vented water heaters, I may contact OEG to arrange for one of its technicians to conduct a preventative maintenance inspection of the Equipment and that all labour and materials required to carry out the inspection and to make the necessary repairs will be provided by OEG at no additional cost to me. Maintenance of the Equipment will include a safety test for carbon monoxide. (b) I also understand that all installation, maintenance and repairs to the Equipment must be performed by OEG or an authorized OEG technician and that should any other individual attempt to install, remove (except as may be permitted in section 9f), modify, repair or tamper with the equipment, the preventative maintenance inspection described above will be void, and OEG may terminate the agreement and/or charge me for the costs of any labour and materials related to any repairs, servicing or maintenance required to be carried out, or may void warranty coverage as determined by OEG acting reasonably.

4. Ownership and Interest: I understand that OEG is and shall remain the owner of the Equipment at all times and that OEG is not transferring title to me. I agree that the Equipment will remain OEG’s personal property even though it may become affixed to my residence and I will keep the equipment free of liens, security interests, mortgages and other claims. OEG may register, at its own expense, its interest in the equipment against me and/or against title to the residence. To the extent permitted by law, I hereby waive any right to receive a copy of such registration and appoint OEG as my lawful attorney for the purpose of doing any such registrations. I also agree that OEG may sell, assign, concurrently lease or otherwise dispose of, or grant a security interest in, all or part of its right, title and interest in the Equipment or this agreement to anyone else without my notice or consent. I will keep the Equipment at my residence.

5. Assignment by OEG: OEG may, at any time during the Term of this Agreement assign all of its rights, title, obligations and entitlements under this Agreement and upon such assignment, OEG shall be relieved of any further obligations to me under this agreement subsequent to the date of such assignment.

6. Termination: (A) End of Term: At the end of the Term, this Agreement will automatically terminate and I will pay OEG an amount equal to the sum of: (I) any periodic payments due on or before termination that have not already been paid or waived, together with the interest owing on overdue amounts; (II) any expenses incurred by OEG for the removal of the Equipment from my possession, as described in Part (C) and subject to Part (F) below; and (III) Any charge for unreasonable or excessive wear or use of the Equipment, which charge will be calculated based on industry standards and rates as required to bring the Equipment into proper serviceable condition as would be expected of similar Equipment. (B) Early Termination: I understand that I may contact OEG by telephone at any time prior to the end of the Term and, upon sixty (60) days notice, terminate this Agreement and arrange for the removal of the Equipment from my residence by OEG’s technician and will pay OEG the sum describe [sic] in Part (A) above….

7. Miscellaneous: This Agreement is the entire agreement between me and OEG. It is governed by the laws of the Province of Ontario and the laws of Canada applicable therein. Should any of the terms and conditions in this Agreement be held invalid for any reason by a Court or regulatory body of competent jurisdiction, then such terms or conditions shall be deemed severed from this Agreement and the remaining terms and conditions shall continue in full force and effect. Neither the failure nor delay of OEG to exercise any right or to enforce any term of this Agreement shall be construed as a waiver of such right or term, or of any other right or term hereunder.

8. Your Rights Under the Consumer Protection Act, 2002: You may cancel this agreement at any time during the period that ends ten (10) days after the day you receive a written copy of the agreement. You do not need to give the supplier a reason for cancelling during this 10-day period. If the supplier does not make delivery within 30 days after the delivery date specified in this agreement or if the supplier does not begin performance of his, her or its obligations within 30 days after the commencement date specified in this agreement, you may cancel this agreement at any time before delivery or commencement of performance. You lose the right to cancel if, after the 30-day period has expired, you agree to accept delivery or authorize commencement of performance. If the delivery date or commencement date is not specified in this agreement and the supplier does not deliver or commence performance within 30 days after the date this agreement is entered into, you may cancel this agreement at any time before delivery or commencement of performance. You lose the right to cancel if, after the 30-day period has expired, you agree to accept delivery or authorize commencement of performance. In addition, there are other grounds that allow you to cancel this agreement. You may also have other rights, duties and remedies at law. For more information, you may contact the Ministry of Consumer and Business Services. To cancel this agreement, you must give notice of cancellation to the supplier, at the address set out in the agreement, by any means that allows you to prove the date on which you gave notice. If no address is set out in the agreement, use any address of the supplier that is on record with the Government of Ontario or the Government of Canada or is known by you. If you cancel this agreement, the supplier has fifteen (15) days to refund any payment you have made and returned to you all goods delivered under a trade-in arrangement (or refund an amount equal to the trade-in allowance). However, if you cancel this agreement after having solicited the goods or services from the supplier and having requested that delivery be made or performance be commenced within ten (10) days after the date of this agreement is entered into, the supplier is entitled to reasonable compensation for the goods and services that you received before the earlier of the 11th day after the date this agreement was entered into and the date on which you gave notice to the supplier, except goods that can be repossessed by or returned to the supplier.

180The agreements refer to Ontario Energy but for consistency with the rest of this decision, I will use MDG unless as part of a quote.

181I observe the following with respect to the agreement terms:

a. The term of the agreement is the useful life of the equipment which is estimated to be “about 15 years”. There is no fixed end date to the lease.

b. The agreement is for both rental of equipment and provision of ongoing service and maintenance by MDG.

c. Subject to disqualifying events, MDG is responsible for the cost of preventative maintenance, servicing and repairs throughout the term of the agreement.

d. The amount of the monthly payment is not broken down between equipment rental and servicing. The annual or aggregate value of the servicing component is also not estimated.

e. The monthly amount payable can increase annually by 3.8%. The exact monthly amount payable in the future is uncertain.

f. The value of the equipment if purchased is not set out. The implicit finance charge is not disclosed.

g. The agreement is between MDG and the customer. There is no reference to Home Trust anywhere in the agreement.

h. MDG retains ownership of the equipment throughout the term of the lease.

i. The agreement provides for termination at the end of the term and early termination by the consumer. In either case, MDG attends at the property and removes the equipment at the consumer’s expense.

j. There is no provision for buying out the lease or buying the equipment during or at the end of the term of the agreement.

k. The agreement is silent as to any buyout program available.

l. The consumer covenants to keep the equipment free from any encumbrance and to inform any purchaser of the residence that the equipment is owned by MDG.

m. MDG is entitled to register its ownership interest in the equipment on the title of the consumer.

n. MDG is entitled to assign its right, title and interest in the equipment to a third party.

o. MDG is entitled to grant a security interest in its right, title or interest in the equipment or in the agreement with the consumer.

p. The agreement does not indicate that MDG had an agreement in place with Home Trust to assign the first 60 monthly payments and that Home Trust would be registering a Notice of Security Interest against the consumer’s property.

q. The agreement does not expressly indicate that if MDG grants a security interest in the equipment or agreement, that security interest may be registered against title to the consumer’s property.

r. The agreement contains the usual entire agreement provision.

s. The rights indicated to be available pursuant to the Consumer Protection Act, 2002 focus on cancellation although there is a general statement in the midst of that provision that indicates the consumer may have other rights, duties and remedies at law.

182It is undisputed that the agreement signed by Mr. Cullaton is a standard form agreement used by MDG during the claim period. The agreement signed by Mr. Cullaton was executed at his residence. All or virtually all of the agreements signed by class members were signed at their residences or, at least, not at MDG’s place of business.

183In cross-examination, Mr. Farber admitted that MDG did not provide a separate disclosure statement to class members because he understood that no such disclosure was required under the Consumer Protection Act, 2002.

Notice of Security Interest (NOSI)

184On October 6, 2014, Home Trust registered a NOSI on title to Mr. Cullaton’s property in the amount of $11,779.50. That figure is nowhere to be found in the agreement between Mr. Cullaton and MDG.

185In the NOSI, Home Trust is the Applicant, not MDG. The document states:

Under a notice of security agreement made between Hugh Cullaton, …, the debtor and the applicant, the secured party a security interest has been created in HVAC Equipment and/or Water Heater. The collateral is located or affixed or is to be affixed to the selected PIN.

186There is no security agreement between Mr. Cullaton and Home Trust. Further, Mr. Cullaton did not enter into any agreement with MDG for a water heater.

Program Agreements

187Home Trust first began a business relationship with MDG in 2009 relating to home improvement loans to consumers. There was no equipment rental component to those consumer transactions.

188In 2010, Home Trust began a program for financing vendors, like MDG, who rented HVAC and related equipment to consumers. According to Mr. Diseri, Senior Vice President, Retail Credit at Home Trust, the program worked as follows:

1. Vendors entered into program agreements with Home Trust;

2. Vendors entered into equipment lease contracts with consumers. Those agreements permitted vendors to register and assign security interests in the leased equipment;

3. Home Trust had the option to accept or refuse an assignment of a given consumer contract;

4. For those contracts that Home Trust accepted an assignment, Home Trust provided upfront financing to the vendors for the purchase and installation of the equipment, and other start-up expenses;

5. Home Trust registered a charge against the rented equipment pursuant to the consumer contracts; and

6. In exchange for an assignment of the accounts, Home Trust made upfront payments to the vendor.

189Home Trust adapted program agreements in place with other vendors and provided same to MDG. Home Trust also vetted the MDG consumer contract, including legal review, and provided feedback to MDG on that agreement. The final version of the consumer agreement used by MDG was approved by Home Trust and was appended as a schedule to the Program Agreements. It could only be modified by MDG with Home Trust’s approval in writing.

190On May 30, 2012, Home Trust and MDG entered into the Enbridge Territory Program Agreement (“ETPA”) and related Security Agreement (“ETSA”). On December 19, 2012, Home Trust and MDG entered into the Union Territory Program Agreement (“UTPA”) and related Security Agreement (“UTSA”). The two Program Agreements and two Security Agreements are substantially the same.

191Consumers who entered into rental agreements with MDG were billed monthly on their natural gas bill, either Enbridge or Union Gas, depending where the consumer resided. MDG entered into separate collection agreements with each of Enbridge and Union Gas to collect and remit payments by consumers under the rental agreements in return for a fee taken off the top.

192For purposes of this motion, I will refer to the terms in the ETPA and ETSA although, as mentioned, the Enbridge agreements are substantially the same as the Union agreements.

a. ETPA

193The recitals to the ETPA are instructive. The third and fourth recitals state:

AND WHEREAS Home trust is prepared to finance from time to time Ontario Energy’s [MDG’s] rental agreements with certain of Ontario Energy’s customers in return for the sale of Ontario Energy’s right to the payments under the Collection Agreements related to such rental agreements;

AND WHEREAS Ontario Energy and Home Trust wish to set forth their mutual understanding with respect to the terms and conditions upon which Home Trust will acquire rental agreements and Ontario Energy’s entitlement to payments in respect of settlement amounts under the Collection Agreements. [Italics added]

194Collection Agreement is a defined term in the ETPA. It refers to the program by which Enbridge provides billing and collection services to MDG pursuant to an agreement between them.

195Section 1 is the definitions provision. Where I capitalize a term in this part of the decision, I am using the term as defined in the ETPA.

196Section 2 is titled: “FINANCE PROGRAM”. Section 2.1 sets out MDG’s responsibilities which can be summarized as follows:

a. Enter into signed Rental Agreements and install the Equipment at the Customer’s premises.

b. Submit the Customer’s data to Enbridge who will check to ensure that the Customer is in good standing with Enbridge. If so, Enbridge will enrol the Customer in its program for billing and collecting for MDG.

c. If enrolled by Enbridge and if MDG wants Home Trust to accept the Rental Agreement as a Program Rental Agreement, MDG provides specific information in a spreadsheet format. Home Trust can do its own credit search on the Customer if it wants to.

d. When Home Trust accepts the Customer and, if applicable, “when Home Trust has approved the Customer for credit”, MDG will send electronic copies of certain documents including the Rental Agreement and confirmation of installation to Home Trust.

e. MDG must retain paper copies of the documents provided to Home Trust.

197Section 2.2 sets out Home Trust’s responsibilities:

a. On receipt of the documentation from MDG, Home Trust may confirm the installation of the equipment.

b. Home Trust pays to MDG the amount “determined in accordance with the rates set out in Section 14”.

198Section 14 of the ETPA sets out the formula for calculating the amount Home Trust will pay MDG (the Acquisition Price) for acquisition of the Settlement Amount Entitlements for a Program Rental Agreement. Essentially, Home Trust advances to MDG the amount that, if financed for a five-year term, ten (10) year amortization at 8.9%, will be repaid in full by the monthly payments, net of Enbridge’s fee, made by the consumer. The financing rate was later reduced to 6.99% by an Amending Agreement dated February 24, 2015.

199If the monthly amount payable by the Customer increases annually as contemplated by the rental agreement, that increase inures only to MDG’s benefit. The monthly payment amount to which Home Trust is entitled remains constant through the 60-month term.

200Section 3(b) states:

Subject to Sections 3(c), 9, and 12, Ontario Energy hereby sells and assigns to Home Trust and Home Trust acquires all right, title and interest in all current and Future Settlement Amount Entitlements in respect of each Program Rental Agreement for the Program Rental Term for such Program Rental Agreement. [Italics added.]

201Thus, MDG sold and assigned to Home Trust its right to receive the amounts collected by Enbridge, net of Enbridge’s fee, from the customer each month for 60 months.

202The agreement provides for a Blocked Account controlled by Home Trust into which payments from Customers for Program Rental Agreements are deposited by Enbridge. MDG is liable to make payments missed by a Customer. MDG’s name and logo appear on the Enbridge bill to the Customer.

203The agreement contemplates that a customer may move and the new owner of the property will assume the monthly payments (Section 7). Section 8 is entitled: “REPLACEMENT RENTAL AGREEMENTS AND EARLY REPAYMENT”. It states in part:

In the event a Customer wishes to terminate or buyout a Program Rental Agreement, a Customer moves or a Customer defaults in payment under its Program Rental Agreement, Ontario Energy will have the following options: … [Italics added.]

204I pause to observe the following:

1. The ETPA contemplates both early termination and buyout by a customer.

2. The options enumerated in section 8 belong to MDG, not the Customer; however, buyout by a Customer is contemplated.

205In his cross-examination, Farber testified that if a customer “buys out” the rental agreement, he/she will own the equipment. By contrast, on termination, the equipment still belongs to MDG. Arrangements are made for its removal from the consumer’s home per the termination provision in the rental agreement.

206Section 4 of the ETPA deals with security. It states, inter alia:

SECURITY

(a) To secure the due payment and performance of the Obligations, Ontario Energy shall deliver to Home Trust each of the security documents listed below on the date hereof:

(i) A security agreement creating Liens over each Program Rental Agreement and the related Equipment; and

(ii) An account acknowledgement agreement relative to the Blocked Account.

207“Lien” is a defined term:

“Lien” means any interest in property intended to secure the payment of an obligation, including a mortgage, pledge, charge, lien, assignment by way of security or security interest;

208Therefore, the ETPA required MDG to give a security agreement to Home Trust securing MDG’s due performance of its obligations under the ETPA. That security agreement was to grant a lien in favour of Home Trust in the equipment being rented by customers and in the rental agreements. The lien is granted by MDG, not the consumer.

209The Program Rental Agreement is the rental agreement with the consumer. Section 3 of the ETPA requires that the rental agreement “at all times contain terms, in form and content satisfactory to Home Trust …”. The required terms include default provisions, registration of security and assignment of the rental agreements. Thus, Home Trust approved the terms of the rental agreements used by MDG and, in fact, mandated their use.

b. ETSA

210As required by the ETPA, MDG executed a Security Agreement by which it granted a security interest in all of its right, title and interest in the Equipment rented to consumers and each Program Rental Agreement: section 2.1. MDG covenanted not to encumber the Collateral and that it would be the owner of same: section 3.1. The security interest secures MDG’s obligations to Home Trust under the ETPA.

Blocked Accounts

211For some consumers, monthly rental payments were automatically withdrawn from their bank accounts and paid to an account held by Home Trust. To the consumer, it appeared that he/she was paying Home Trust.

212In his affidavit, Mr. Diseri indicated that when MDG was first added to the rental program for the Union Territory, it did not have a third-party intermediary like Enbridge to collect and manage customer payments. Home Trust filled that role temporarily. It accepted payments for MDG, netted them against amounts owed to Home Trust, and remitted the balance to MDG.

213A blocked account agreement was made with the Royal Bank of Canada on February 10, 2016. According to Mr. Diseri, the blocked account “was established to relieve Home Trust of the administrative burden of administering” MDG’s consumer accounts. MDG then assumed responsibility for the administrative burden of supervising the accounts.

214After the blocked account was in place for a period of time, MDG and Home Trust had a dispute. The blocked account was terminated. MDG continues to be responsible for the administrative burden of the accounts but Home Trust receives payments from consumers directly.

215As I understand the rationale for the blocked accounts, they ensured that each party to the Program Agreement received the appropriate amounts as consumers made their monthly payments. Monies from consumers were deposited to the account. MDG and Home Trust did a regular reconciliation as to what was due to Home Trust. The Royal Bank would transfer the amount payable to Home Trust and remit the balance to MDG subject to maintaining a minimum balance in the account.

216Thus, at various points Home Trust received payments directly from consumers and administered their accounts. At other times, rental monies went into a separate account at a bank. At all times, MDG was responsible for pursuing collection of any overdue amounts from consumers. If any consumers failed to pay as contracted, MDG was required to make Home Trust whole for the shortfall.

Security Registrations

217As mentioned, Home Trust registered NOSI’s on title to the property of some consumers. The NOSI registered on Mr. Cullaton’s property is typical of such registrations.

218For other consumers, however, Home Trust registered a Notice of Lodgement of Title Documents (“NLTD”). The motion materials contain affidavits of some consumers against whose title a NLTD was registered. By way of example, Kevin Anderson of London entered into a furnace rental agreement with MDG on November 5, 2015. On January 8, 2016, Home Trust registered a NLTD in the amount of $7,044.47 which states:

By lodgement of title document Kevin Alexander Anderson delivered title deeds to the premises to OEG [MDG] with the agreement that security over the premises was granted until the total amount payable is paid and all other obligations are performed under the rental agreement. The rental agreement was purchased by Home Trust Company

219I note that:

1. The rental agreement signed by Mr. Anderson contains no reference to a figure of $7,044.47.

2. The rental agreement permitted MDG to register its ownership interest in the equipment against title to Mr. Anderson’s property; it does not state that Mr. Anderson was delivering his title deeds to MDG.

3. Mr. Anderson did not, in fact, deliver his title documents to MDG.

4. The rental agreement allowed MDG to grant security over the equipment that it continued to own and the rental agreement. It says nothing about granting security in the Mr. Anderson’s premises until $7,044.47 is paid by Mr. Anderson.

5. The rental agreement does not say that Mr. Anderson is giving a security interest over his property to secure his due performance of his obligations under the rental agreement.

6. The grant of a security interest in the equipment and in the rental agreement was given by MDG, not Mr. Anderson. It secures MDG’s obligations to Home Trust, not Mr. Anderson’s obligation under the rental agreement.

7. The NLTD indicates that Home Trust “purchased” the rental agreement.

220In his affidavit, Mr. Diseri explained the amounts set out in the NOSI’s and NLTD’s as follows:

35. In sum: the consideration listed in security interest documents registered by Home Trust in respect of a given consumer agreement is based on the cost to Home Trust to temporarily acquire the revenue stream for that agreement, and not on the factors comprising the buyout cost to the consumer. The consideration amount listed in the registration documents reflects Home Trust’s costs to temporarily acquire the revenue stream from OEG; the buyout cost amount reflects the cost to OEG to close out the contract. This is why the consideration amounts on the Home Trust registrations are different from the buyout amounts quoted to consumers in respect of the same consumer agreements. [Italics in original.]

Buyouts

221Mr. Diseri refers to buyouts at para. 32 of his affidavit; specifically, he indicates that Mr. Cullaton’s right to “buy out the contract” is found at section 9 of the rental agreement.

222Section 9 of the rental agreement deals with “termination” at the end of the term of the agreement or earlier at the option of the consumer. In either case, ownership of the equipment remains with MDG and is removed from the consumer’s premises at the expense of the consumer.

223A buyout is different. On a buyout, the consumer’s obligations under the rental agreement are over and he/she owns the equipment free and clear of any security interest given by MDG.

224Some of the consumer affiants on the motions sought a buyout from their rental agreement. In some cases, they dealt with MDG and received the buyout particulars from MDG. In other cases, the response and correspondence came from Home Trust. The buyout was done by direct dealing between the consumer and Home Trust.

225In any event, it is clear that throughout the rental program there existed a means for customers to buy out the rental agreement and acquire ownership of the equipment. There is no reference to that option in the rental agreement, nor is there any separate disclosure document that reveals its availability and terms.

Positions of the Parties

a. Plaintiff

226The plaintiff asserts that with respect to the common issues addressed on this summary judgment motion, there are no genuine issues requiring a trial. Determination of these issues will meaningfully advance the litigation and their resolution, if favourable to the plaintiff. The plaintiff submits that the evidence necessary to resolve these issues is comprised of the agreements, the defendants’ own documents and the defendants’ admissions.

227Plaintiff’s counsel indicated that if summary judgment is granted, the other causes of action asserted will remain alive and will have to be determined. However, there is no prospect of inconsistent findings of fact because my findings will be based on the terms of the agreements, the defendants’ own documents and the defendants’ evidence.

228Counsel indicated that some causes of action may “drop off” but he could not and would not say which causes of action would remain. I observe that the plaintiff’s motion seeks, inter alia, directions “forthwith” concerning a subsequent hearing to determine remedies flowing from a successful summary judgment motion (see para. 163 above).

229With respect to the merits of the issues raised by the summary judgment motion, the plaintiff asserts:

1. The agreement with consumers is a non-exempt lease agreement;

2. The defendants breached the lease disclosure requirements under the Consumer Protection Act, 2002 and regulations whether the standard form agreement is determined to be an exempt or non-exempt lease;

3. The defendants breached the requirements for a direct agreement under the Consumer Protection Act, 2002 and its regulations;

4. The defendants breached the unfair practices provisions of the Consumer Protection Act, 2002;

5. Although the agreement with consumers is silent as to a buyout option, in practice one existed as contemplated by the Program Agreements;

6. The agreement with consumers is an option lease as defined in s. 72(1) of the General Regulation;

7. The defendants failed to comply with the disclosure requirements for an option lease;

8. Home Trust is not entitled to register a NOSI or lodgement against title to the consumer’s real property title;

9. The documents registered against title to the consumers’ property is misleading and does not comply with the agreement or requirements of the Consumer Protection Act, 2002.

b. Home Trust

230The defendant, Home Trust, contends that there are material facts in dispute; there are genuine issues that require a trial; there is a risk of inconsistent findings of fact in the remaining liability issues; some of the issues raised are novel, unsettled points of law; the factual matrix necessary for the remaining liability issues mirrors that before me and, as such, it is inefficient and a waste of judicial resources to decide the limited issues raised on this motion; and, this is not an appropriate case for partial summary judgment having regard to the admonition of the Court of Appeal in Butera.

231With respect to the merits of the issues raised by the summary judgment motion, Home Trust asserts:

1. Home Trust is not a “supplier” as defined in the Consumer Protection Act, 2002;

2. At all times and in all respects, Home Trust was a third-party lender with no privity of contract with consumers, no disclosure obligations to consumers and engaged in no misleading or unfair practices vis-à-vis consumers;

3. The consumer lease agreements are security for MDG’s indebtedness to Home Trust;

4. The registrations made against title by NOSI or lodgement are permitted by the agreements signed by consumers and are necessary to perfect its security interest in accordance with the Personal Property Security Act, s. 32;

5. The lease agreements with consumers are exempt leases under Part VIII of the General Regulation;

6. It is inappropriate to use the criteria for disclosure to determine whether a lease is exempt or not as the plaintiff has done in his submissions;

7. The lease agreements with consumers are also direct and/or future performance agreements as defined in the General Regulation;

8. The defendant, MDG, complied with the disclosure obligations for exempt leases, direct agreements and future performance agreements;

9. Consumers have no right or entitlement to buy out the lease; rather, that is a privilege extended to them;

10. The lease agreement is not an “option lease”;

11. Under s. 18(4) of the Consumer Protection Act, 2002, the consumer is required to give notice of his/her intention to seek rescission or damages. Waiver of the one-year notice period may be made by the court where it is in the interests of justice to do so. The waiver should not be given here. Accordingly, s. 18 remedies do not apply;

12. Consumers got what they bargained for.

c. MDG

232The defendant, MDG, adopts the submissions made by counsel for Home Trust above. It contends that this is anything but a straightforward application of settled law to a contract. I do not have the context for the changes made to the regulations which is crucial to a proper understanding of the legislative scheme. The buyout privilege is not found in the consumer agreement; it must be read into the agreement for the Consumer Protection Act, 2002 and regulations to apply. That is a question of fact that is very much in dispute and requires the full evidentiary record that a trial will provide.

233Counsel for MDG submitted, inter alia:

1. The exercise of statutory interpretation of the Act and regulations is more nuanced that it appears at first blush. The history of the amendments must be considered in light of the practice of the Ministry before and after. The court needs a fuller factual context for the legislation and its development;

2. The plaintiff claims that the contract is unconscionable. The law as to what is required to establish an unconscionable contract is unsettled. Accordingly, the risk of conflicting findings of fact is heightened;

3. There are no decisions on point applying and interpreting the provisions of Consumer Protection Act, 2002 and its regulations, some of which are relatively new. Novel questions of law should not be determined on a summary judgment motion: Blanchard v. Parrott, 2015 ONSC 6846 at para. 11.

Analysis

234Broadly stated, the issues raised by this motion for partial summary judgment are:

1. What provisions of the Consumer Protection Act, 2002 and its regulations apply?

2. What obligations, if any, does Home Trust owe consumers who entered into the lease agreements?

3. Does the lease agreement permit registration by Home Trust of the NOSI’s and Notices of Lodgement of Title in the form and manner used by Home Trust?

4. Do the lease agreements, practice regarding buyouts, registrations on title, disclosure or lack thereof, alone or in combination, constitute “unfair practices” contrary to the provisions of the Consumer Protection Act, 2002?

235The determination of issue #1 looks at whether the lease agreements with consumers are exempt or not. Are they also direct agreements, future performance agreements and/or option leases? That determination will drive what disclosure obligations apply.

236Issue #2 is focused on the role that Home Trust played in dealing with each of MDG and consumers. Is Home Trust merely a third-party lender as it contends? Is it a “supplier” as defined by the Consumer Protection Act, 2002? Is it an assignee and, if so, how is it affected if MDG breached its obligations to consumers under the Act or regulations given the provisions of the Program Agreements and Home Trust’s approval of the lease agreement?

237Issue #3 focuses on the rights given by consumers to MDG in the lease agreement and whether those rights permit Home Trust to register what it has, and in the form that it has, on title to the consumer’s real property title. The interplay between the Personal Property Security Act and the Consumer Protection Act, 2002 must be considered. The plaintiff relies on s. 160 of the Land Titles Act to remove the registrations from title.

238Issue #4 examines whether the defendant(s) have committed an “unfair practice” under the Act by any of the individual or combined means indicated. “[U]nfair practices” are found in ss. 14-16 of the Act. The defendants’ individual liability will depend on specific findings of fact. The plaintiff asserts that the lease agreements are the “defendants’ agreements”, notwithstanding that Home Trust is not a named party to the lease agreement. The plaintiff alleges a joint business enterprise. Even if not a joint enterprise, if the registrations made by Home Trust go beyond what is permitted by the lease agreement, are both defendants’ liable? Is Home Trust liable for or affected by lack of disclosure by MDG?

239Before the merits of these issues can be addressed, I must first consider whether,

1. Do any of these issues raise genuine issues requiring a trial?

2. Are any or all of these issues discrete issues that are severable from the remaining issues in the action such that there is no risk of inconsistent findings on essentially the same claim?

3. Looking at the litigation as a whole, is granting summary judgment advisable?

240I find that the nature of and characterization of the Home Trust’s role in the consumer leasing business raises a genuine issue that requires a trial. I am not prepared to find on this record that Home Trust is a “supplier” as that term is defined in the Consumer Protection Act, 2002. There is evidence of some direct dealing with consumers. There is evidence as to the relationship between Home Trust and MDG. I am not satisfied that I can have a sufficient appreciation of the dealings, roles and responsibilities of the defendants on the material before me.

241I have indicated above some misgivings with respect to the connection or, more accurately, the disconnect between the wording of the lease agreement that allows MDG to register its ownership interest in the equipment against title to the consumers’ property and to grant a security interest in that equipment on the one hand, and the documents actually registered by Home Trust on the other. To properly understand that issue and the propriety of Home Trust’s actions, the provisions of the Personal Property Security Act must be considered and applied.

242I observe that s. 73 of the Personal Property Security Act states:

(1) Where there is a conflict between a provision of this Act and a provision of any general or special Act, the provision of this Act prevails.

(2) Despite subsection (1),

a) where there is a conflict between a provision of this Act and a provision of the Consumer Protection Act, 2002, the provision of the Consumer Protection Act, 2002 prevails; …

243Counsel did not address s. 73 in argument. I am unaware of any case where s. 73(b) has been applied. Counsel for Home Trust maintains that the registrations effected by Home Trust are necessary to perfect Home Trust’s security interest in the equipment and comply with the provisions of the Personal Property Security Act. The plaintiff argues that the registrations do not accord with the wording of the agreement and/or the agreement fails to disclose material facts regarding what is being permitted by the consumer. That inadequate disclosure violates the Consumer Protection Act, 2002 and constitutes an unfair practice. In my view, this is a genuine issue that requires a trial. This is an unsettled area of law.

244In Romano v. D’Onofrio, 2005 CanLII 43288 (ON CA), [2005] O.J. No. 4969, the Court of Appeal overturned an order granting summary judgment on the basis that there was a significant question of law involving the interpretation of a provision of the Libel and Slander Act. Feldman J. wrote at paras. 7-9:

7…This was not a case where the law was settled and could be applied to admitted facts. …As this court stated in R. D. Belanger & Associates Ltd. v. Stadium Corp. of Ontario Ltd. (1991), 1991 CanLII 2731 (ON CA), 5 O.R. (3d) 778, [1991] O.J. No. 1962 (C.A.), at p. 782 O.R.: “Matters of law which have not been settled fully in our jurisprudence should not be disposed of at this [interlocutory] stage of the proceedings.” See also Bendix Foreign Exchange Corp. v. Integrated Payment Systems Canada Inc., [2005] O.J. No. 2241, 139 A.C.W.S. (3d) 1092 (C.A.), at para. 6 and Jane Doe 1 v. Manitoba, [2005] M.J. No. 335, 2005 MBCA 109 (C.A.), at paras. 19-23.

8The decision whether words spoken at a public gathering into a microphone constitutes libel or slander under the Act is both novel and significant and involves an analysis not only of the microphone technology and perhaps other technologies for comparison and context, but also the policy behind the distinction between libel and slander under the Act.

9That type of interpretive analysis should only be done in the context of a full factual record, possibly including appropriate expert evidence: Spasic Estate v. Imperial Tobacco Ltd. (2000), 2000 CanLII 17170 (ON CA), 49 O.R. (3d) 699, [2000] O.J. No. 2690 (C.A.) at paras. 22-23, leave to appeal to S.C.C. refused [2000] S.C.C.A. No. 547; see also Law Society of Upper Canada v. Ernst & Young (2003), 2003 CanLII 14187 (ON CA), 65 O.R. (3d) 577, [2003] O.J. No. 2691 (C.A.) at para. 50. …

245The defendants also point to the lack of settled law as it relates to what constitutes an “exempt lease” under s. 77 of the General Regulation. The regulatory history, the interaction between different Parts, and the disclosure required all point to the need for the kind of full evidentiary record that a trial will provide. The law is far from settled.

246I have considered whether it is possible to pull out a discrete issue, the determination of which would assist the parties and would not give rise to the possibility of inconsistent findings on the remaining issues. I conclude that I cannot do so.

247I note the position of plaintiff’s counsel: all other causes of action asserted remain on the table. While it is possible that some may not be pursued, plaintiff’s counsel did not articulate which would drop away. It is not the case that plaintiff’s counsel advised that if the summary judgment motion is successful, the other causes of action become redundant and will not be pursued. It is not the case that plaintiff’s counsel advised that if the plaintiff succeeds on the motion, the remaining causes of action to be pursued are limited and identified such that I can identify clearly the unlikelihood of inconsistent findings.

248The nature of the relationship between Home Trust and MDG is a material fact in the assessment of liability, if any, to consumers in respect of not only the claims under the Consumer Protection Act, 2002 but the remaining causes of action. The remaining causes of action will require much of the same factual matrix. Determination of an unfair practice under the Competition Act will require findings of fact by the trial judge on substantially the same facts. The tort of civil conspiracy requires an examination of what the defendants agreed to do, what they did and the purpose of same. Again, it strikes me that there is overlap with the evidence on the issues raised on the summary judgment motion with the possibility of inconsistent findings later.

249I also note that the motion brought by plaintiff’s counsel seeks an order to hold an immediate hearing to address the remedies that flow from the determination of liability on the summary judgment motion. Thus, the plaintiff proposes to deal with remedies while at the same time pursuing liability of the defendants on other causes of action. That strikes me as impractical and unworkable.

250In these circumstances, I am not satisfied that this is one of the “rare cases” where partial summary judgment should be granted.

251In summary, I find that partial summary judgment is inappropriate in the circumstances of this case because:

1. The is a very real risk of inconsistent findings of fact on the remaining causes of action;

2. The issues raised involve unsettled and/or novel points of law;

3. A fuller evidentiary record is necessary in order to have a sufficient appreciation of the facts for the purpose of determining the issues on a final basis;

4. There are genuine issues that require a trial for their resolution; and

5. Having regard to the whole of the litigation, partial summary judgment is not advisable.

252Given my conclusion that partial summary judgment is not appropriate in this case, I need not address the merits of the substantive issues raised by the parties on the motion; e.g. what disclosure obligations apply and on whom.

253I turn to whether I should exercise my discretion under r. 20.05(1) and (2). The parties did not make submissions on same and it seems to me that the issue should be addressed after I have had the benefit of their submissions. Those submissions will no doubt be informed by my reasons above, especially the facts in the summary judgment portion of this decision.

254Counsel should confer and schedule a case conference. I am inclined to an oral hearing but, again, I would like the benefit of counsel’s input.

255Therefore, the motion for summary judgment will be dismissed subject to determination of r. 20.05(1) and (2) relief.

Costs

256If the parties cannot agree on the costs of the certification motion, they may make written submissions not exceeding five pages within 21 days hereof.

257With respect to the motion for summary judgment, that motion is not yet complete and the issue of costs should await the outcome of the motion.

258I understand that no costs are sought in relation to the motion to discontinue as against Mr. Farber.

“Justice R. Raikes”