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Justice Perell Seeks To Tame Western Mount Vesuvius With First Principles

7 minute read

For those who have been following the British Columbia Court of Appeal's ("BCCA") decisions in the ongoing Wakelam[1] vs. Watson[2] debate, they may understand why one frustrated Ontario counsel recently summed it up as – “a wild west show.” Now Justice Perell has weighed in on the debate referring to it as a “Vesuvius-like explosion of case law”.[3]

For those who have not been following the debate some background is in order. Since 2012, the BCCA has ruled on the ability to certify restitutionary and statutory based claims in the areas of product liability, misleading advertising, and price fixing as follows:

  1. Koubi v. Mazda Canada[4] - the BCCA found that the British Columbia Business Practices and Consumer Protection Act (“BPCPA”) provides a complete code that regulates consumer transactions in that Province and that a breach of its provisions did not give rise to a restitutionary claim. It also found restitutionary claims to be inconsistent with the intent of the Sale of Goods Act;
  2. Wakelam v. Wyeth Consumer Healthcare - the BCCA again found that the BPCPA provides a complete code and there was no indication of a legislative intent to create additional restitutionary causes of action. The court then went further, applying the same reasoning to the plaintiffs' claim under the Competition Act's misleading advertising provisions; and
  3. Watson v. Bank of America Corporation – the BCCA found that Wakelam did not determine the issue of whether a breach of the Competition Act would support an unlawful means conspiracy claim and consequential restitutionary claims, but it does bar pure restitutionary claims based solely on a breach of the Competition Act.

Faced with what appeared to many to be conflicting decisions of the BCCA and the recent Supreme Court of Canada ("SCC") decisions in the Competition Act trilogy[5], Justice Perell chose to approach the matter “as a matter of first principles”. The case before him was the lithium ion rechargeable batteries price fixing case. The plaintiffs' proposed class action alleged a breach of Section 45 of the Competition Act, and claimed damages pursuant to Section 36, and for conspiracy, interference with economic relations and unjust enrichment. In light of the SCC's 2014 decision in Bram[6], the plaintiffs did not pursue their interference with economic relations claim. Justice Perell ultimately certified the action based solely on a breach of Section 45 of the Competition Act and the claim for consequential damages under Section 36. He refused to certify the balance of the claims. Here is how he got there.

Justice Perell began with another SCC case, this time from 1925. In Orpen v. Roberts,[7] the SCC concluded that the breach of a municipal by-law did not give rise to a common law cause of action. From this and subsequent authorities he drew the principle that when Parliament introduces a comprehensive statutory scheme containing a statutory cause of action, it intends to preclude tort-based claims based upon a breach of that statute. Justice Perell reviewed the legislative history of the Competition Act. He concluded that in its 1975 amendments Parliament had signalled its intention that the scheme was to be comprehensive and was intended to “preclude a redundant and inefficient common law cause of action for conspiracy”.[8]

Next, Justice Perell turned his attention to the case law that has recognized a common law unlawful means conspiracy, including Watson. He expressed the view that Wakelam had been properly decided and Watson had not, finding that the error in Watson was to frame the question as whether Parliament had intended to provide a “new and superior”[9] method of remedying a breach of the statute. The correct question, according to Justice Perell, was whether Parliament had intended to preclude unlawful means conspiracy claims based on a breach of the Competition Act. He noted:

Given the policy pulls of competition law, Parliament was not constrained to only introduce pro-plaintiff amendments to the Competition Act, and, in my opinion, Parliament intended to introduce a statutory cause of action that had a briefer limitation period and that did not admit of punitive damages but did offer plaintiffs a more efficient claim against price fixers.[10]

Not only did Justice Perell conclude that the statutory cause of action in Section 36 of the Competition Act precluded an unlawful means conspiracy claim, he found that it also precluded unjust enrichment claims based on a breach of the Act. He went on to state that he would have also rejected the unjust enrichment claim on the basis that it would not satisfy the preferable procedure criterion because it would “unnecessarily complicate the class proceeding and likely make it unmanageable”.[11] He based this conclusion on his finding that the calculation of damages for an unjust enrichment claim would take “the action into largely unexplored legal territory about the calculation of a disgorgement remedy” in circumstances in which “the prospect of an aggregate assessment of damages is feasible making disgorgement redundant”.[12]

This then left the statutory cause of action and the plaintiffs' predominant purpose conspiracy claim. Justice Perell rejected the defendants' submissions that there were no meaningful common issues resulting in their being a lack of commonality in the proof of loss, and elected to certify the statutory cause of action. However, when it came to the plaintiffs' predominant purpose conspiracy, Justice Perell came to a different result. Acknowledging that it was not plain and obvious that the plaintiffs could not succeed with their allegations that the defendants' primary intent had been to injure purchasers of battery products, he found:

It does seem to me that it is plain and obvious that the plaintiffs' chance of success for a predominant purpose conspiracy based on purely lawful conduct in the pricing of LIBs is very remote. If the plaintiffs succeed on the statutory cause of action, the predominate purpose conspiracy is redundant and if the plaintiffs fail on the statutory cause of action, it is unlikely the plaintiffs will snatch victory from the jaws of defeat.[13]

While Justice Perell may have found his own answer to the Wakelam vs. Watson debate, it remains unclear what an Ontario appellate court will do and whether Justice Perell's approach correctly observed principles of stare decisis given the recent Supreme Court trilogy and the finding in Pro-Sys that “it is not plain and obvious that there is no cause of action in unlawful means conspiracy or in intentional interference with economic interests.”[14]

The content contained in these blogs is intended to provide information about the subject matter and is not intended as legal advice. If you would like further information or advice on any of the subjects discussed in a blog post, please contact the author.

[1] Wakelam v. Wyeth Consumer Healthcare, 2014 BCCA, 36 (“Wakelam”)

[2] Watson v. Bank of America Corporation, 2015 BCCA, 362 (“Watson”)

[3] Shah v LG Chem, 2015 ONSC 6148(“Shah”)

[4] Koubi v. Mazda Canada, 2012 BCCA 310

[5] Pro-Sys Consultants Ltd. v. Microsoft, 2013 SCC 57 (“Pro-Sys”); Sun-Rype Products Ltd. v. Archer Daniels Midland, 2013 SCC 58 and Infineon Technologies AG v. Option Consommateurs, 2013 SCC 59

[6] A.I. Enterprises Ltd. v. Bram Enterprises Ltd., 2014 SCC 12 (“Bram”)

[7] Orpen v. Roberts [1925], SCR 364

[8] Shah, supra, para. 212

[9] Watson, supra, para. 55

[10] Shah, supra, para. 227

[11] Shah, supra, para. 234

[12] Ibid

[13] Ibid

[14] Pro-Sys, supra, para. 83

Angus T. McKinnon

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