Thursday, May 31, 2012

Right to terminate a consumer supply contract on amendment

Weller v. Reliance Home Comfort Limited Partnership, 2012 ONCA 360 deals with General, O. Reg. 17/05 to the Consumer Protection Act, 2002, S.O. 2002.  The Regulation governs changes made by a supplier to a consumer agreement.  Such changes can be made but only if the consumer has a right of termination.  The Regulations says:

42(2) A consumer agreement mentioned in subsection (1) that provides for amendment, renewal or extension may, in addition to being amendable, renewable or extendable under section 41, be amended, renewed or extended if the following conditions are satisfied:

1. The agreement indicates what elements of the agreement the supplier may propose to amend, renew or extend and at what intervals the supplier may propose an amendment, renewal or extension.

2. The agreement gives the consumer at least one of the following alternatives to accepting the supplier's proposal to amend, renew or extend:

i. terminating the agreement, or

ii. retaining the existing agreement unchanged.

3. The agreement requires the supplier to give the consumer advance notice of a proposal to amend, renew or extend.

(3) The amendment, renewal or extension takes effect on the later of,

(a) the date specified in the notice; and

(b) the date that is 30 days after the day on which the consumer receives the notice.

(4) The amendment, renewal or extension does not retroactively affect rights and obligations acquired by the consumer before the effective date of the amendment, renewal or extension.


The Court holds the right to terminate must be absolute:


Interpretation of the Regulation

[15]     The main objective of consumer protection legislation such as the Consumer Protection Act is to protect consumers: see Richard v. Time Inc., 2012 SCC 8, at para. 50. Thus, while this particular litigation in reality pits two suppliers against each other, the Act and Regulation must be interpreted in a manner that furthers the consumer protection objective. The Act and Regulation contain special protections for consumers who are bound by remote agreements. Among those protections is the protection against unfair unilateral amendments of the agreement set out in s. 42 of the Regulation. Central to this protection is s. 42(2)2, which requires the supplier to give the consumer the option to either terminate the agreement or retain the existing agreement unchanged as alternatives to accepting the proposed amendment. As indicated, this agreement does not give the consumer the right to retain the existing agreement unchanged. The issue is therefore whether the agreement allows the consumer to terminate the agreement.

[16]     I agree with the appellant that the right to terminate must be unconditional. An agreement that attaches conditions to the right to terminate does not provide the consumer with a true alternative to accepting the amendment. Depending upon the conditions for termination, the consumer could effectively be coerced into accepting the proposed amendment. Such an interpretation would be inconsistent with the consumer protection objective of the legislation. It follows that I agree with the appellant that the application judge erred in holding that the agreement complied with s. 42(2)2 because the conditions for termination were reasonable. Allowing the supplier to attach reasonable conditions would add a level of uncertainty. The consumer would often not know for sure whether or not he or she was required to comply with the conditions imposed by the agreement as the cost of opting out of the proposed amendment. Such an interpretation would encourage litigation and undermine the consumer protection objectives of the provisions.


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