Canadian Class Action Defence Blog

Court of Appeal Confirms Class Action Contract Claims can be Decided on Summary Judgment

Apr 22, 2016 4 MIN READ
Craig Lockwood

Partner, Disputes, Toronto

On April 4, 2016, the Ontario Court of Appeal granted summary judgment in Sankar v Bell Mobility Inc., dismissing a certified class action against Bell Mobility Inc. (“Bell”) regarding prepaid wireless credits. The proposed class action was commenced against Bell for alleged breaches of contract.

The Court of Appeal’s decision provides valuable insight into the courts’ willingness to make dispositive findings on a summary judgment motion in the context of a class proceeding.

The Certified Class Proceeding

The key issue before the Court was whether the prepaid credits sold by Bell through its various brands expired on the last day of their active period, or on the following day. Bell’s practice during the relevant time was to claim unused funds the day after the end of the active period where the account had not been “topped-up” by the customer in order to extend the activation period. If the card did not expire until the day after the end of the active period, then Bell’s practice of treating the unused funds as forfeited as at the last day of the activation period would have been in breach of contract.

The Court of Appeal’s “Contextual” Approach to Contract Interpretation

At first instance, the court concluded – in the context of a summary judgment motion – that the credits at issue expired at the end of the last day of activation, such that Bell’s business practices did not constitute a breach of contract. On appeal, the Court of Appeal agreed. Notably, in coming to this conclusion, the Court of Appeal took into consideration a number of interrelated documents on the basis that they collectively formed the “contract” between the parties. In this regard, the Court considered  the initial agreement between the parties, the expiry  dates and terms of service set out in the prepaid cards, and the PIN (personal identification number) receipts received when customers topped up their account.

The relevant portions of the terms of service for the Bell Mobility Brand and the Solo Mobile Brand read: “Value deposited into your prepaid account is available as prepaid credits for your Service and such credits are non-refundable, non-transferable, and will expire after a specified time period.” The Virgin Mobile terms of service stated: “Any top balance on your account after the expiry date is forfeited and non-refundable.” In addition, the PIN receipt customers received on payment for the card or top-up read: “$15 valid for 30 days” (Bell Mobility); “$20 Good for 45 days” (Solo Mobility); and “Funds expire, $15-30 days after activation” (Virgin Mobile).

The Court of Appeal held that the motions judge was entitled to rely on documents other than the initial agreement, as these documents collectively formed the contractual relationship between the parties. The Court stated: “It is not uncommon in modern contracts, including contracts made partly on “paper” and partly on the internet, for the contract terms to be found in several “documents.”

The Court further held that these interrelated agreements contained contractual terms and therefore went beyond the background factual matrix. In particular, the Court noted that there “is a difference between considering the factual matrix and considering the documents that make up the contract itself.” However, the Court observed that the factual circumstances surrounding each customer’s specific dealings with Bell were not relevant to the contractual interpretation at issue. The Court further stated that if the factual matrix did bear on the interpretation of the contract at issue, then the matter would not be suitable for a common issue in a class proceeding.

The Court denied the Plaintiff’s attempt to read into the contract texts messages and various other types of communications that Bell sent to the Plaintiffs after the prepaid wireless cards were purchased but prior to the expiry of the cards. The Court held that since these communications were made after the time of contractual formation, they did not form “part of the factual matrix surrounding the formation of the contract. At their highest, they were post-contractual representations.” The Court held that issues of misrepresentation or promissory estoppel could not be resolved through a class proceeding, as they required individual determination.

Key Take-Aways

The Court of Appeal’s ruling confirms the courts’ willingness to embark on a detailed factual and legal analysis in the context of a summary judgment motion brought in the class context, even to the point of assessing multiple document sources for the purposes of determining the nature and scope of the underlying contract. As such, the case provides support for defendants who wish to dispose of a putative class action at an early stage of proceedings on the basis that the underlying claims lack legal or factual merit.