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4. Restitution by Supplier to Consumer After Rescission

(a) Overview

As is explained in s.3(b) above, 'restitution' is a legal term referring to returning money and property to a party who has been deprived of it inappropriately. When a consumer elects to rescind (cancel) a consumer agreement 'ab initio' (from the beginning) with the supplier, then restitution by both sides must be addressed.

This section addresses the supplier's restitution duties. Note that unlike a consumer's restitution duties, they are relatively straightforward and not subject to significant variation depending on the sector-specific economic sector.

(b) Supplier's Duties

Restitution to the consumer invariably involves money paid, and maybe some 'traded-in' property). The supplier shall "within 15 days after the day the consumer gives notice to the supplier ... that the consumer is cancelling the consumer agreement" do the following [CPA s.96(1); CP Reg 79(1)]:

• return any payments made under the consumer agreement and under any related agreements [most of which are also voided [see s.3(g) above], and
  
  
• return "in a condition substantially similar to when they were delivered all goods delivered under a trade-in arrangement or refund to the consumer an amount equal to the trade-in allowance" to the consumer's address [CP Reg s.79(2)].

If the supplier refunds the amount of the trade-in allowance and it turns out that title to the goods has not yet been transferred away from the consumer, then upon the refund being given title over the goods passes to the person who would normally, under the contract, have received it [CPA s.97]. That is, the consumer doesn't get to keep both the cash value and the traded-in item(s) as well.

The "consumer's address" for these purposes is:

• if the address is set out in the consumer agreement, that address; or
  
  
• if the address is not set out in the consumer agreement, the address where the consumer resided at the time the consumer agreement was executed, except that
  
  
• where the supplier knows that the consumer's address has changed from the above, the address is the consumer's current address [CP Reg s.78].

If the supplier fails to meet these duties, the consumer may sue them for restitution and damages in relation to the default [CPA s.96(6)]. Additionally, if the supplier is prosecuted and convicted for failure to comply with these duties, the provincial offences court may order restitution [CPA 116(1)(b)(viii), 117: see Ch.9: "Prosecutions"].


5. Restitution by Consumer to Supplier After Rescission: General Rules

(a) Overview

When a consumer elects to rescind (cancel) a consumer agreement 'ab initio' (from the beginning), as discussed in s.3(c) above or as otherwise specifically allowed under CPA law, the supplier is entitled to restitution.

This section addresses the consumer's 'general' restitution duties, that is the duty that applies unless some other specific consumer restitution rules apply [see s.6 for these specific rules]. Note that unlike a supplier's restitution duties, a consumer duties are subject to a variety of exceptions and special rules depending on the 'forms' or economic sector into which the consumer agreement falls.

These duties are the only ones owed in law by the consumer to the supplier (or anyone else whose goods they possess) with respect to those goods. This means that no other forms of civil legal action may be taken against them respecting the goods as long as they have complied with these duties [CPA s.96(5)].

However, if the consumer has failed to meet these duties, the supplier may sue them for restitution and damages in relation to the default [CPA s.96(7)].

(b) Consumer's Duties Regarding Goods in Their Possession

In the case of goods given to the consumer, the general rule is that the consumer shall either [CPA s.96(2)]:

• return the goods; or
  
  
• permit the goods to be repossessed.

(c) Consumer Duties Regarding Care of Goods

Further, the consumer who has rescinded (cancelled) the consumer agreement is under a duty, owed to whoever is entitled to possession of the goods, to "take reasonable care of the goods" that have come into their possession under the consumer or other related agreement [CPA s.96(3,4)].

This duty commences at the date the consumer gives the supplier notice of the cancellation and ends 21 days later [CP Reg s.82].


6. Restitution by Consumer to Supplier After Rescission: Special Rules

(a) Overview

While s.5 above ["Restitution by Consumer After Rescission: General Rules"] has outlined the usual restitution duties of a consumer after they cancel a consumer agreement, the CPA sets out a number of special circumstances in which those usual rules are varied or supplemented. These variations and supplements are set out in this section.

These duties are the only ones owed in law by the consumer to the supplier (or anyone else whose goods they possess) with respect to those goods. This means that no other forms of civil legal action may be taken against them respecting the goods as long as they have complied with these duties [CPA s.96(5)].

However, if the consumer has failed to meet these duties, the supplier may sue them for restitution and damages in relation to the default [CPA s.96(7)].

(b) Modification in Consumer's Restitution Duties for Specific Consumer Agreements [Reg 80]

. To Which Consumer Agreements These Variations Apply

The below-noted modifications in restitution duties apply respecting the following types of consumer agreements [CP Reg 80(1)]:

• a "direct agreement" that is governed by the CPA [see Ch.3, s.3]
  
  
• a "time share agreement;" [see the sector-specific chapter of that name]
  
  
• a "personal development services agreement" that is governed by the CPA [see sector-specific chapter of that name];
  
  
• a loan brokering consumer agreement [see the sector-specific chapter of that name], and
  
  
• a credit repair consumer agreement [see the sector-specific chapter of that name].

. Modified Restitution Duties

For these consumer agreements, consumers have the following restitution duties, which commence [CP Reg s.80(4)]:

• if the consumer has not paid any monies or given any property in trade-in, right away on cancellation of the consumer agreement; or
  
  
• otherwise, after the supplier has refunded monies paid under the consumer agreement and (if applicable) returns (or compensates for) trade-in property.

The modified consumer duties are:

• On Receipt of a Written 'Request to Repossess' [CP Reg 80(2)]
  
  The consumer shall either give the supplier (or their designate appointed in writing) a "reasonable opportunity to repossess the goods at the consumer's address" or shall return the goods to the supplier's address [CP Reg s.80(2)]. For these purposes the "supplier's address" is [CP Reg 78]:
  
  - where the address is set out in the consumer agreement, that address; or
  
  - where the address is not set out in the consumer agreement, or the consumer has not received a copy of the consumer agreement, any address of the supplier on record with the Government of Ontario or the Government of Canada, or an address of the supplier known by the consumer.
  
  If goods are returned the supplier is deemed to have consented to their return and is responsible for the reasonable cost of returning the goods [CP Reg 80(6)].
  
  
• On Receipt of a Written 'Request to Destroy Electronic Goods' [CP Reg 80(3)]
  
  The consumer shall destroy the electronic goods in accordance with the directions set out in the Request. Electronic goods are "goods that are created, recorded, transmitted or stored in digital form or in other intangible form by electronic, magnetic or optical means or by any other means that has capabilities for creation, recording, transmission or storage similar to those means" [CP Reg s.80(3)].
  
  
• Where Neither Request is Received
  
  Where neither a 'Request to Repossess' or a 'Request to Destroy Electronic Goods' is received the consumer may return the goods to the supplier at the above-noted address [CP Reg 80(5)]. This is a consumer option, not a requirement. If good are returned, the supplier is deemed to have consented to their return and is responsible for the reasonable cost of returning the goods [CP Reg 80(6)].

. Care of Goods Duties

The consumer who has rescinded (cancelled) the consumer agreement is under a duty, owed to whoever is entitled to possession of the goods, to "take reasonable care of the goods" that have come into their possession under the consumer or other related agreement [CPA s.96(3,4)].

This duty commences at the date the consumer gives the supplier 'Notice of Cancellation' and ends at the earliest of [CP Reg s.82]:

• the return of the goods to the supplier;
  
  
• in the case of electronic goods, on their destruction by the consumer in accordance with a 'Request to Destroy Electronic Goods';
  
  
• their repossession by the supplier, in accordance with a 'Request to Repossess', or
  
  
• 21 days after Delivery of the 'Notice of Cancellation' to the supplier, if either:
  
  - no 'Request to Repossess' is made, or
  
  - if one is made and (despite the consumer having provided a reasonable oppourtunity for repossession) no repossession has taken place.

(c) Additional Consumer's Restitution Duties for Specific Consumer Agreements [Reg 81]

. To Which Consumer Agreements These Modifications Apply

The below-noted modifications to consumer restitution duties are in addition to those set out in s.5 above and apply respecting the cancellation of the following types of consumer agreements [CP Reg 81]:

• an "internet agreement" governed by the CPA [see Ch.3, s.4]
  
  
• a "remote agreement" governed by the CPA [see Ch.3, s.5], and
  
  
• a "future performance agreement" governed by the CPA [see Ch.3, s.2].

. Modified Restitution Duties

For these consumer agreements, and except in some cases involving electronic goods (explained below), the consumer must return the goods to the supplier's address "by any method that provides the consumer with confirmation of delivery" within 15 days after the later of [CP Reg s.81(2)]:

• the date that the consumer gives the supplier 'Notice of Cancellation'; and
  
  
• the date that the goods come into the possession of the consumer.

For these purposes the "supplier's address" is [CP Reg 78]:

• where the address is set out in the consumer agreement, that address; or
  
  
• where the address is not set out in the consumer agreement, or the consumer has not received a copy of the consumer agreement:
  
  - any address of the supplier on record with the Government of Ontario or the Government of Canada, or
  
  - an address of the supplier known by the consumer.

Return is considered to be effective immediately regardless of the method used by the consumer (eg. mail is effective when mailed, courier when sent, etc) [CP Reg s.80(3)], and the supplier is deemed to have consented to their return and is responsible for the reasonable cost of returning the goods [CP Reg 81(4)].

. Exception for Electronic Goods Where 'Request to Destroy Electronic Goods' Received

The only exception to the above return duty is where the goods are electronic goods and the consumer has received from the supplier a 'Request to Destroy Electronic Goods', in which case they shall destroy them as the direction instructs [CP Reg s.81(5)]. 'Electronic goods' are "goods that are created, recorded, transmitted or stored in digital form or in other intangible form by electronic, magnetic or optical means or by any other means that has capabilities for creation, recording, transmission or storage similar to those means".

Note that there is no requirement that the consumer wait for a 'Request to Destroy' for any specific time before they can return electronic goods as described above, so it would appear that they can return electronic goods at any any time before such a Request is received. Obviously such return supercedes any duty they might have with respect to a direction to destroy which 'crosses in the mail'.

(d) Additional Consumer's Restitution Duties Where Solicitation by Consumer and Early Performance of Direct Agreement [Reg 83]

. When These Additional Duties Apply

The below-noted consumer restitution duties are in addition to those set out in s.5 above and apply respecting direct agreements [see Ch.3, s.3: "Forms of Consumer Agreements: Direct Agreements"] when the following circumstances apply [CP Reg 83(1); CP Reg 20(2)]:

• Consumer Solicitation
  
  The consumer solicited the goods and services (ie. the consumer initiated the negotiations).
  
  
• Early Performance Requested
  
  The consumer requested that the supplier make delivery or commence performance within 10 days after execution of the consumer agreement.
  
  Ten days is significant here as it is the time window (when counted from the date that the supplier delivers a copy of the consumer agreement to the consumer), that the consumer has to cancel the consumer agreement without reason. The whole purpose of the these particular modifications to the general CPA consumer restitution duties is to address the potential unfairness that suppliers might face when early performance has been requested, followed quickly by such a cancellation (rescission).
  
  
• Specific Cancellation by Consumer
  
  The consumer has delivered to the supplier a 'Notice of Cancellation' based on either [CPA 43]:
  
  - their right to cancel a consumer agreement within one year after execution if the consumer does not receive a copy of the consumer agreement [see Ch.3, s.3(c)]; or
  
  - their right to cancel a consumer agreement within 10 days after receiving a written copy of it [see Ch.3, s.3(d)].

. Consumer Restitution Duties

Where all the above circumstances are met, the supplier is entitled to reasonable compensation for [CP Reg 83(2,3)]:

• Goods
  
  - That were received by the consumer before cancellation (ie. before delivery of cancellation notice by the consumer) or the elapse of 10 days from the execution of the consumer agreement, whichever comes first ("early-delivered goods"), and
  
  - that cannot be repossessed by or returned to the supplier because they have been consumed, have perished or have been integrated into other property such "that it would be impractical to remove them from the other property" ("integrated").
  
  Where reasonable compensation is made respecting 'integrated' goods the supplier's obligations under the consumer agreement and otherwise at law respecting those goods continues despite the cancellation of the balance of the agreement [CP Reg 83(3)]. This means that the supplier is still liable for any faults in such goods, despite the payment of compensation.
  
  
• Services
  
  That were received by the consumer before cancellation (ie. before delivery of 'Notice of Cancellation' by the consumer) or the elapse of 10 days from the execution of the consumer agreement, whichever comes first.
  
  Where reasonable compensation is made respecting services, the supplier's obligations under the consumer agreement and otherwise at law respecting those services continues despite the cancellation of the balance of the agreement [CP Reg 83(3)]. This means that the supplier is still liable for any fault or negligence in the performance of the services, despite the payment of compensation.

The supplier may recover their entitlement to reasonable compensation [CP Reg 83(4)]:

• by deduction from any payment refund due to the consumer resulting from the cancellation; and/or
  
  
• from the consumer (either by voluntary payment or lawsuit).

. Care of Goods Duties

The consumer who has cancelled the consumer agreement is under a duty, owed to whoever is entitled to possession of the goods, to "take reasonable care of the goods" that have come into their possession under the consumer or other related agreement [CPA s.96(3,4)]. This duty commences at the date the consumer gives the supplier 'Notice of Cancellation' and ends 21 days later [CP Reg s.82].

(e) Gift Card Agreements Exempt from Recovery and Return of Goods Duties

Any goods obtained under a 'gift card agreement' are almost always held by a third party (and now prior) holder of the gift card. As such there is no duty to return such goods to, or allow their recovery by, the supplier [CP Reg 25.1].


7. Consumer-Issued Notices (aka Demand or Request) Procedures

Terminology Note: The CPA sometimes uses the terms 'notice', 'request' and 'demand' interchangeably when referring to consumer-issued cancellations of a consumer agreement or other similar communications. I will generally use the term 'Notice' unless the context indicates otherwise.

(a) Overview

This section addresses the procedures that apply in most situations where the CPA requires a consumer to give 'Notice' [CPA s.92]. The one exception to these rules is for "unfair practices', which have their own 'Notice' procedures and which are explained in Ch.6, s.5(f): "Unfair Practices: Remedies for Unfair Practices: Notice Requirements".

(b) General Situations Where Consumer Notices Required

Notices must be given by a consumer to a supplier to cancel (rescind) a consumer agreement and/or as a preliminary step to commencing civil action in four general situations in the CPA:

• General Rescission
  
  To cancel or rescind a consumer agreement that violates the CPA (to sue to obtain restitution of monies and other consideration given thereunder) [CPA s.94, 96(6)] [see s.3(f) above: "General Rescission (Cancellation) Remedies: Notice of Rescission or Cancellation Required"];
  
  
• Illegal Charges
  
  Suing to recover a CPA-illegal fee, charge or payment [CPA s.98(1)] [this is discussed in Ch.5, s.4(d): "CPA Consumer Rights: Prices, Estimates and Extra Charges: Recovery of Illegal Charges"];
  
  
• Unsolicited Goods
  
  Suing to recover monies paid for unsolicited goods or services [CPA 13(6-8)] [discussed in Ch.5, s.5: "CPA Consumer Rights: Negative-Option Contract Formation"]; and
  
  
• Credit Card Reversal
  
  Requiring a credit card company to reverse or cancel charges, or before suing them to recover any such funds, when they have been charged to a credit card and where the supplier will not refund [CPA s.99] (discussed in s.8 below).

As well, these same consumer Notice procedures apply to terminate optional services attached to credit agreements [CPA s.73] [see the sector-specific chapter entitled "Loans and Credit Agreements" at s.9 "Optional Services"], and for other sector-specific purposes.

(c) General Requirements of Notice

While the CPA and its Regulation may impose specific content requirements for the different types of Notices (these will be noted in the specific topic discussions), the form and manner of giving notice can be quite informal [CPA s.92(1)], as set out below.

This tolerance of informality should not be taken as comforting to a consumer however, as the more 'informal' the manner of the Notice they use, the more difficult it will be to prove in evidence that it has been made. In this respect, 'formality'- usually attendent with 'paperwork' - may equate with 'more easily provable' or 'just plain sensible'.

In any event, the general requirements of Notice are:

• General Contents
  
  A notice must "indicate the intention of the consumer to seek the remedy being requested".
  
  
• Form of Notice
  
  A notice may be given in any form (ie. written, verbal or otherwise) [CPA s.92(2,3)].
  
  
• Service of Notice
  
  Personal service of a notice is effective when done, and any other manner of service (eg. mail, email, courier, etc) is effective when sent [CPA s.92(4). This is a variation from normal legal service rules, which typically impose a 3-5 day delay in effectiveness of mail and one day for courier service.
  
  
• Supplier Addresss
  
  A notice may be sent to the supplier at [CPA s.92(5)]:
  
  - their address as set out in the consumer agreement;
  
  - if a copy of the consumer agreement has not been received by the consumer or if the supplier's address is not set out in the consumer agreement, then to any address of the supplier on record with the Governments of Ontario or Canada or any other address of the supplier known to the consumer.

Note again that these Notice rules do not apply to remedies claimed under Part III (unfair practices) [CPA s.91] [for these see Ch.6, s.5(f): "Unfair Practices: Remedies for Unfair Practices: Notice Requirements".].

(d) Court May Disregard Consumer Failure to Give Notice or Demand

In any proceedings before it, a court may disregard the failure of a consumer to properly give Notice in accordance with the CPA, if "it is in the interest of justice to do so" [CPA s.101].

Consumers would be unwise to view this as an 'easy-out' to their Notice duties. Best efforts should be undertaken - and evidenced (copies, delivery receipts etc) - so that you can show the court that you honestly (and perhaps) repeatedly tried to serve Notice on a supplier.

(e) Interpretation of Notice or Demand Contents

It is possible that some courts would find the following interpretative provision (titled "Ambiguities to benefit consumer") as applying to save poorly-worded Notice contents:

CPA s.11 Any ambiguity that allows for more than one reasonable interpretation of a consumer agreement provided by the supplier to the consumer or of any information that must be disclosed under this Act shall be interpreted to the benefit of the consumer.

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