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CIVIL PROCEDURE - Parties - Class or representative actions - Stay of action due to parallel proceeding

Thursday, April 04, 2019 @ 3:25 PM  


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Appeal by Telus Communications Inc. (Telus) from a judgment of the Ontario Court of Appeal affirming a decision that refused to stay business customers’ claims in a class action against Telus. The class consisted of both consumers and non-consumers who entered into mobile phone service contracts. The action centered on allegations that Telus engaged in an undisclosed practice of rounding up calls to the next minute such that customers were overcharged. The contracts contained an arbitration clause from which consumers were shielded by the Consumer Protection Act. They were thus free to pursue their claims in court. The business customers however did not benefit from these protections, and the Arbitration Act applied. Finding that it would not be reasonable to separate the consumer claims from the business customer claims, the motions judge declined to stay the latter. The Court of Appeal dismissed the appeal and upheld the motions judge’s decision to refuse a stay. The Court had to decide whether s. 7(5) of the Arbitration Act granted the court discretion to refuse to stay the non-consumer claims in the context of a proposed consumer/non-consumer class action where only the non-consumer claims were subject to an otherwise valid and binding arbitration agreement.

HELD: Appeal allowed. The approach set started with the purpose and scheme of the Arbitration Act and implied reading the text of s. 7 in light of its full context. The approach was both conscious of and consistent with the policy choices made by the legislature in the Arbitration Act itself and in other relevant statutes such as the Consumer Protection Act and the Class Proceedings Act. The policy that parties to a valid arbitration agreement should abide by their agreement went hand in hand with the principle of limited court intervention in arbitration matters. If the preconditions set in s.7(5) were not met, then it had nothing to say. Unless one of the five exceptions listed in s. 7(2) applied, the general rule under s. 7(1) required that the proceeding be stayed. The proceeding involved a single matter — alleged overbilling — and that matter was dealt with in the arbitration agreements into which both the consumers and business customers entered. Although distinguishing between consumers and non-consumers could be a difficult exercise in certain cases, that difficulty did not bear on the proper interpretation of s. 7(5). The Arbitration Act could have been amended to grant the courts broad discretion to refuse a stay where doing otherwise could result in a multiplicity of proceedings, but the legislature had not taken this step. While a multiplicity of proceedings could cause practical difficulties, this concern could not be permitted to trump the language of the statute. The appeal was allowed, and the business customer claims were stayed.

TELUS Communications Inc. v. Wellman, [2019] S.C.J. No. 19, Supreme Court of Canada, R. Wagner C.J. and R.S. Abella, M.J. Moldaver, A. Karakatsanis, C. Gascon, S. Côté, R. Brown, M. Rowe and S.L. Martin JJ., April 4, 2019. Digest No. TLD-April12019012-SCC