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Consumer Protection (Ontario) Law - General CPA Law

Chapter 7 - General Civil Remedies
(01 July 2013)

  1. Overview
    (a) General
    (b) Consumer Rights
    (c) Rescission
    (d) Restitution
    (e) Right of Civil Action When Default in Restitution
    (f) No Contracting Out
    (g) Special Credit Card Remedies
    (h) Common Law Right of Action Preserved
    (i) Parallel but Separate 'Unfair Practices' Regime
  2. No Dictating of Remedial Forums
    (a) Overview
    (b) No Arbitration Exclusivity
    (c) Other Remedies Allowed After Dispute Arises
  3. General Rescission (Cancellation) Remedies
    (a) Overview
    (b) 'Rescission', 'Cancellation' and 'Restitution' Explained
    (c) General Rescission Right on Non-Compliance by Supplier [CPA 93(1)]
    (d) The 'Inequitable' Exception [CPA 93(2)]
    (e) Notice of Rescission or Cancellation Required
    (f) Effect on Collateral Arrangements
  4. Restitution by Supplier to Consumer After Rescission
    (a) Overview
    (b) Supplier's Duties
  5. Restitution by Consumer to Supplier After Rescission: General Rules
    (a) Overview
    (b) Consumer's Duties Regarding Goods in Their Possession: General Rule
    (c) Consumer Duties Re Care of Goods
  6. Restitution by Consumer to Supplier After Rescission: Special Rules
    (a) Overview
    (b) Modification in Consumer's Restitution Duties for Specific
    Consumer Agreements [Reg 80]
    . To Which Consumer Agreements These Variations Apply
    . Modified Restitution Duties
    . Care of Goods Duties
    (c) Additional Consumer's Restitution Duties for Specific Consumer Agreements [Reg 81]
    . To Which Consumer Agreements These Modifications Apply
    . Modified Restitution Duties
    . Exception for Electronic Goods Where Request to Destroy Received
    (d) Additional Consumer's Restitution Duties Where Solicitation by Consumer and Early Performance of Direct Agreement [Reg 83]
    . When These Additional Duties Apply
    . Consumer Restitution Duties
    . Care of Goods Duties
    (e) Gift Card Agreements Exempt from Recovery and Return of Goods Duties
  7. Consumer-Issued Notices (aka Demand or Request) Procedures
    (a) Overview
    (b) General Situations Where Consumer Notices Required
    (c) General Requirements of Notice
    (d) Court May Disregard Consumer Failure to Give Notice or Demand
    (e) Interpretation of Notice or Demand Contents
  8. Cancellation and Reversal of Credit Card Charges
    (a) Overview
    (b) Where Available
    (c) Failure of Recovery from Supplier is Precondition to Request to Reverse or Cancel Credit Card Charge
    (d) Request (Notice) Procedures
    (e) Credit Card Company Duties
  9. Civil Court Remedies for General CPA Rights
    (a) Overview
    (b) General CPA Rights That May be Civilly-Enforced
    (c) Court Restitution Remedy
    (d) Damages and More
    (e) Exemplary and Punitive Damages
    (f) Evidence
    . Overview
    . Civil Court Use of Evidence Obtained in an Official CPA Capacity
    (g) Legal Assistance
    (h) Class Actions and the CPA

1. Overview

(a) General

In addition to the Director and Ministry-enforced public remedies of administrative orders [Ch.8: "CPA Administrative Enforcement"] and regulatory prosecutions [Ch.9: "CPA Prosecutions"], the Consumer Protection Act (CPA) relies heavily on individual consumers to privately enforce its provisions.

This 'Overview' section summarizes the CPA civil remedies regime, which is more fully explained in this full chapter.

(b) Consumer Rights

The CPA first creates a wide range of supplier duties (and consumer rights) - both generally across the all economic sectors that it applies to, and some sector-specific. These duties and rights include such things as extensive pre-contract disclosure of contractual terms, restrictions on 'false, misleading or deceptive' representations' (advertising), making estimates binding to within 10%, and even simple 'cooling-off' rights to cancel the consumer agreement without cause.

(c) Rescission

On supplier default of most of these CPA rights the CPA grants the consumer the right to cancel the consumer agreement at the consumer's election, carried out by the delivery of a Notice of Cancellation to the supplier.

The form of cancellation (properly: 'rescission') used in the CPA does not just end the consumer's duties under the consumer agreement from the date of cancellation and then forward into the future. Rather the cancellation or rescission is 'ab initio' ('from the beginning' of the consumer agreement).

(d) Restitution

This form of 'ab initio' cancellation necessitates that both parties, consumer and supplier alike, engage in post-cancellation restitution to each other respecting all that has passed between them since the consumer agreement commenced. Typically this involves the return of goods by the consumer and the return of monies paid by the supplier. In the case of past services performed or perishable goods typically a value compensation provision is imposed on the consumer.

From the point that the Notice of Cancellation is delivered both parties are under specific timelines to complete their respective restitution duties.

(e) Right of Civil Action When Default in Restitution

Failure of a party to fulfil their restitution duties in the time required automatically triggers a right of civil action in the aggrieved parties (the original Notice of Cancellation doubling as a de facto 'demand' notice). Practically most such claims will be suited to the Small Claims Court with its $35,000 monetary jurisdiction [at August 2022], and parallel jurisdiction over the return of chattel property to the same dollar value.

(f) No Contracting Out

Facilitating the operation and effectiveness of this regime are provisions overriding 'fine print' clauses which purport to contract out of or waive CPA rights, or try to impose onerous venue (eg. California) or remedial forum (eg. arbitration) clauses. The CPA tries to ensure that the right of consumers to access an Ontario court respecting their CPA rights is guaranteed.

(g) Special Credit Card Remedies

Further, where consumer payments now subject to restitution were originally paid by credit card, the consumer has a 'back up' right to demand - and then proceed in court - against the credit card issuer themselves should the supplier remain in default of their restitution duties.

(h) Common Law Right of Action Preserved

The CPA rights of action do not prohibit use of common law remedies in tort, contract and restitution and claims may (and when called for, should) be advanced both under the CPA and common law causes of action.

(i) Parallel but Separate 'Unfair Practices' Regime

The general CPA rights of action set out in this chapter are complemented by a similar (and largely self-contained) CPA regime for "unfair practices" (typically, false, misleading, deceptive or unconscionable representations) [see Ch.6]. The 'unfair practice' rules also create a civil cause of action - but have their own unique rescission, notice, causes of action and damages provisions.

2. No Dictating of Remedial Forums

(a) Overview

As is discussed in Ch.5, s.2(b) ["General Consumer Rights: CPA Principles of Interpretation: CPA Applies Despite Contracting Out or Waiver Provisions"], the CPA attempts to prevent suppliers and others from circumventing it's rules. While the provisions discussed there prevent contracting out or waiving of the substantive (rights) protections, other attempts have focussed on diverting or limiting remedial procedures into ones more favourable to suppliers.

This technique takes advantage of the unfortunate reality that not all remedial venues for asserting rights are realistically accessible to consumers - due variously to inefficiency, expense, geography or legal complexity. Playing on these systemic weaknesses, suppliers will attempt to contractually limit the available forums in which disputes may be resolved to the ones more accessible and convenient to themselves - which invariably means them being the ones most inaccessible and inconvenient to the consumer.

For example, it is not uncommon in many Ontario consumer agreements to find that the 'fine print' of such agreements purports to require the parties to resolve the dispute under the laws of California, or New York, or wherever the head office of the supplier is located - this despite the fact that the corporation operates retail locations in Ontario, the consumer lives in Ontario, and the transaction occured in Ontario.

The primary legislative protection against such techniques is the general 'no contracting-out or waiver' provision of the CPA:
CPA s.7(1)
The substantive and procedural rights given under this Act apply despite any agreement or waiver to the contrary.
Of course (and as is discussed below in s.9), the natural - and most accessible - remedial route for Ontario consumers to assert their rights is in a local Ontario court, practically (due to the dollar quantum) almost always the Ontario Small Claims court, which is a branch of Ontario's Superior Court of Justice that has jurisdiction over orders to a monetary limit of $25,000. As readers will see, it is to this court that the CPA directs most violations and disputes for civil enforcement. This is doubly-sensible when the consumer is faced with claiming both under CPA law and under the Ontario common law of contract, which is allowed.

(b) No Arbitration Exclusivity

While limiting disputes to Ontario courts is a fine start, it does not end all possible diversion attempts. Another favorite alternative forum preferred by suppliers is arbitration, which in Ontario at least is governed by the Arbitration Act. This statute, and similar like it in other jurisdictions, is procedurally complex and really best suited for inter-corporate disputes involving millions of dollars. Forcing arbitration procedures onto the usually small disputes involved in consumer transactions would be an expensive absurdity.

Thus the CPA [s.7(2)] further provides that:,
... any term or acknowledgment in a consumer agreement or a related agreement that requires or has the effect of requiring that disputes arising out of the consumer agreement be submitted to arbitration is invalid insofar as it prevents a consumer from exercising a right to commence an action in the Superior Court of Justice given under this Act.
In short, arbitration may still be sought, but not to the exclusion of the consumer's right to pursue the case in Ontario civil courts.

Further, the normal arbitration rule that allows a party to apply to the courts for a 'stay' (suspension) of any court proceedings relating to the matter being arbitrated [Arbitration Act, s.7(1)] - is also suspended when the consumer elects to proceed in court [CPA s.7(5)].

(c) Other Remedies Allowed After Dispute Arises

That said, after a dispute has actively arisen where a consumer could sue, the consumer is free to agree to use the remedial procedures that the law normally offers them [CPA s.7(3)] (including but not limited to arbitration). That is, arbitration cannot be imposed on them by virtue of any 'fine print' contract provisions, but it can be voluntarily opted-in by the consumer after a dispute has arisen. Given the fact that private arbitration is party-funded, this right would only make sense in quite large dollar-quantum cases, which are quite rare in consumer law.

Basically, these provisions preserve the consumer's option to elect alternative approaches (eg. different geographical venue, arbitration), while still avoiding the 'forced-arbitration' effect of 'fine-print' exclusivity clauses such as are addressed in (b) above.

If such alternative procedures are agreed to and completed, then any resulting settlements or decisions are binding on the parties [CPA s.7(4)].

Because arbitration is allowed in such optional 'post-dispute' scenarios, the right of a party to apply to court to stay (suspend) related court proceedings is re-instated if and when arbitration is elected for [Arbitration Act, s.7(1); CPA s.7(5)].

3. General Rescission (Cancellation) Remedies

(a) Overview

'Rescission' (cancellation) is a common law contractual remedy that, when applied, renders a contract void and not binding on the parties. Traditionally, in business law contract disputes it is sought as a declaratory remedy, asking a judge to formally 'declare' the contract rescinded as a formal act. It's most common use in that context is where allegations of misrepresentation or mistake as to the terms of the contract are made.

The CPA has created numerous circumstances - both general and specific - where a consumer can elect to treat a consumer agreement as rescinded, without the need to go to court for a formal declaration, by the issuance of a simple notice. While many sector-specific rescission rights are explained in the sector-specific chapters, this present discussion is about a broad CPA-wide general rescission right and the procedural mechanics that apply to them, both general and specific.

(b) 'Rescission', 'Cancellation' and 'Restitution' Explained

The CPA's usage of the two terms 'rescission' and 'cancellation' is largely interchangeable, although for some reason the 'unfair practices' provisions [Ch.8] use the term 'rescission' [see CPA 18(14)], while the rest of the Consumer Protection Act uses the term 'cancellation' [see CPA 95].

Regardless, both terms are used in the CPA in a form traditionally described as 'rescission ab initio' ('from the beginning'). This means that the contract, when rescinded or cancelled, is treated as void from the beginning - ie. it is not just future obligations that are at an end.

This can be confusing, as most of us (including most lawyers) use the term 'cancel' in the sense of something coming to an end, with no addressing of what went before. In that sense, a contract may be legitimately 'cancelled' for a variety of reasons, such as: simple expiry of a term contract, or cancellation initiated by a party in accordance with the terms of the contract itself. This meaning of 'cancellation' simply ends contractual duties at the time of the cancellation with all prior monies paid and goods and services transacted being 'water under the bridge'.

However the CPA uses both general and unfair practices terms in this 'ab initio' meaning, and this naturally dictates a 'restitutionary' method of settling accounts between the parties. 'Restitution' is a non-contractual remedy which reaches back to prior monetary and other transactions between the parties, with the goal of putting them (financially and otherwise) back where they were as though the transaction had never happened.

I will tend to use the terms 'rescission' and 'restitution' throughout this Guide.

Sections 4, 5 and 6 below ["Restitution by Supplier/Consumer After Rescission - General and Special Rules"], address the 'restitution' consequences of rescission. These are fairly straightforward for supplier duties, but subject to some variations for consumer duties depending on the 'form' of the consumer agreement involved.

(c) General Rescission Right on Non-Compliance by Supplier

As a protection to consumers and also as a general deterrent to suppliers, the CPA provides that a consumer agreement "is not binding on the consumer unless the agreement is made in accordance with this Act and the regulations" [CPA s.93(1)].

Firstly, note that the provision reads "not binding on the consumer". This means that the consumer has the option of rescinding or cancelling it - rescission or cancellation is not an automatic thing. The consumer could elect to continue with the consumer agreement, disregarding the CPA-illegal terms - even though the supplier may wish to end the contract.

Secondly, the range of non-compliance that triggers the right to rescind (ie. "unless the agreement is made in accordance with this Act and the regulations") is simply huge [CPA 93(1)]. Read literally, this plainly suggests that any CPA non-compliance - no matter how technical or minor - can justify rescission by a consumer.

Alas were it all that simple. Judicial hesitancy (see the case links) and a vigorously-applied statutory exception [see (d) below] combine to make robust consumer use of this provision a problematic and uncertain venture.

(d) The 'Inequitable' Exception [CPA 93(2)]

Section 93(2) continues to read:
CPA 93(2)
Despite subsection (1), a court may order that a consumer is 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.
This provision is probably the most-cited and applied one in the entire CPA regime. In fact, judges are so keen on applying it (and so to avoid the widespread nature of the CPA 93(1) [above] 'non-binding on breach' provision) that they apply it even without seemingly knowing of it. In my view it's not unfair to characterize the courts' treatment of the CPA 93(1-2) combination as 'cultural-resistance' - in the sense that it doesn't correspond to judicial training, experience, culture and preference.

The essence of the s.93(2) 'inequitable exception' is simple, it avoids the broad 'non-binding' consequences of s.93(1) if it would be inequitable "for the consumer not to be bound". Another way of putting this in most situations is: 'if it would be inequitable to the supplier'.

Equity as a legal concept in the English legal system has quite a venerable history. It, with the 'common law', are at the heart of the Canadian legal system. In this context, you can think of 'equity' as the culturally-dominant sense of what's right and wrong - and it's not hard to conclude that CPA 93(1) offends most judge's sense of 'equity'.

Formally, equity does have more detail that that, as it has several exceptions which, if applicable, deny it's benefit to the party seeking it. Exceptions include the doctrine of 'clean hands' [one seeking equity must not be themselves tarnished by inequity], laches [delay], unconscionability and more.

In the s.93(2) context, 'inequity' may arise when a consumer sues the supplier for restitution, when a supplier sues a consumer for non-payment - or any of numerous similar permutations (eg. counterclaims). The main thing though from the consumer's perspective is prove an equitable 'breach' on the part of the supplier, as that holds the potential to defeat any supplier's claim or defence-use of CPA 93(2).

As you will see from the Ontario (and applicable Canadian) cases there has been relatively few articulated s.93(2) equity-defences advanced. Overwhelmingly the use of s.93(2) has been from suppliers seeking equity. In fact, my opinion regarding the Ontario legal-culture's perspective on s.93(2) is that supplier usually doesn't even have to overtly raise the equity 'defence', as judges are so eager to advance it themselves. The reader can draw their own conclusions on this essential-CPA point on reviewing the linked case-extracts.

My conclusion on a review of the cases is that, through a combination of judicial habit and through lack of familiarity with the Consumer Protection Act, most cases seeking CPA rescission, restitution and damages end up being decided on conventional law grounds unrelated to the CPA.

Properly the courts in cases like this should be applying findings of CPA non-compliance to justify consumers prima facie CPA 93(1) rescission, and then reversing the effects of that under CPA 93(2) if and to the extent that suppliers raise it, and then judges deem it equitable to do so under their CPA 93(2) equitable discretion. That's the way the Consumer Protection Act was designed to work.

***** review/more on this after you've reviewed and org'd the cases again

(e) Notice of Rescission/Cancellation Required

Where, as per (c) above, a consumer has a right to rescind (cancel) a contract and wishes to do so, they must give the supplier 'notice' to that effect [for notice procedures, see s.7 below] [CPA s.94(1)].

With respect to future duties under the consumer agreement between the parties, such a cancellation is effective when the Notice is given [CPA s.94(2)]. As the cancellation or rescission is 'ab initio' (from the beginning) the issuance of notice also triggers the parties' mandatory restitution duties as per sections 4-6 below. The issuance of such notice is also a precondition of the consumer commencing any CPA-grounded civil court action against the supplier.

(f) Effect on Collateral Arrangements

When the above-noted notice is given, not only is the primary consumer agreement considered rescinded (from the beginning), but so are most related collateral contracts and arrangements that may have arisen under it, including [CPA s.95]:
  • Guarantees

    Any guarantees for the payment of money. Where a consumer has a poor credit record it is common for suppliers to extend credit only where a third party (presumably with a better credit rating) signs on as 'guarantor', thus giving the supplier a second person to pursue for the debt.

  • Security Agreements

    Any security agreements or arrangements given by the consumer or guarantor securing the payment of money.

    These can include liens, chattel mortgages and similar claims on chattel property. Typically such security arrangements will be publically-registered (to assert their priority over competing creditors) under the Personal Property Security Act (PPSA) system.

  • Other Collateral Agreements and Instruments

    All related and collateral credit agreements, payment instruments (such as cheques).

    The sector-specific chapter "Loans and Credit Agreements" discusses credit agreements in more depth. It is common practice in consumer goods transactions for suppliers to offer financing of the purchase (a "supplier credit agreement"), usually contracted for with a subsidiary of the supplier corporation, or a third party finance corporation. As well, it is common for such financing contracts to be sold (assigned) as commodities between financing corporations, so the consumer may find themselves being told to make payments to an entirely different corporation (at any time during the term of such payments).

  • Promissory Notes:

    - extended, arranged or facilitated by the person with whom the consumer reached the consumer agreement, or

    - otherwise related to the consumer agreement.

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Last modified: 14-01-23
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