Polanski v Vancouver Career College (Burnaby) Inc. concerns a defendant’s stay application brought under s. 7 of the Arbitration Act, SBC 2020, c 2 (“Arbitration Act”). The Court dismissed the application to stay certain claims made under s. 172 of the British Columbia Business Practices and Consumer Protection Act (“BPCPA”). The Court, relying on various appellate cases, held that s. 172 restricted the parties’ ability to agree to arbitrate and that the policy objectives of s. 172 would not be served by private and confidential arbitration. Why did the court need to re-articulate this well-established principle? Perhaps because the defendant needed to pivot after it had initially brought the application in response to the plaintiffs’ changing positions. The plaintiffs only added the s. 172 claims in the face of the stay motion and then only consented to the stay of the remainder of their claims for damages, including under s. 171 of the BPCPA, at the hearing of the application – no doubt, to the dismay of defence counsel who were facing a moving target. (A brief refresher for those in need it: s. 172 provides for private enforcement of consumer protection claims in the public interest, while s. 171 provides for a private remedy for damages or loss.)
The Court also declined to strike the newly added s. 172 claims. The Court held that the existing pleaded facts supported the claim under s. 172 and that the claim was not bound to fail.
Background to Action– The plaintiffs, eight former students of the defendant, Vancouver Career College (Burnaby) Inc. (“the College”), filed a notice of civil claim alleging that the College had made false, misleading, and deceptive representations regarding a medical spa therapy program. The students claimed relief under the BPCPA.
Each student had signed a Student Enrolment Agreement containing an arbitration clause, which stated in relevant part:
“a) I acknowledge and agree that I am obliged to exhaust the College’s full dispute/complaint resolution processes, …before I can advance any complaint/concern to any external or third party.
b) I understand and agree that right to legal or civil action is limited to a confidential binding arbitration…in accordance with the Arbitration Act of British Columbia… and that complaints, claims, or arbitration of dispute shall only be undertaken on an individual student basis; and
c) I agree that any civil or legal action whatsoever commenced in contravention of this provision shall be stayed in favour of arbitration … and I irrevocably waive rights to a civil trial no matter how pleaded, described or styled…”
The College applied to stay the action under s. 7 of the Arbitration Act, relying on this arbitration clause. When the plaintiffs received the notice of the application, they amended the claim by adding a paragraph in the “Legal Basis” section to seek a declaration under s. 172 of the BPCPA in an amended notice of civil claim (“ANOCC”).
At the hearing of the application, the plaintiffs conceded each of them had signed an agreement containing an arbitration clause and that the clause was not unconscionable. The concessions effectively resulted in the plaintiffs agreeing that most of the claim should be stayed except for their claim under s. 172 of the BCPCA that were added in the ANOCC.
In response, the defendant focused its submissions on the following arguments:
- the claim under s. 172 was really a claim for damages cloaked in a “public interest” claim and should be stayed; and
- the plaintiffs’ ANOCC, which claimed relief under s. 172 of the BPCPA should be struck pursuant to Rule 9-5 of the British Columbia Supreme Court Civil Rules, which provide that the court may order to be struck out the whole or part of a pleading that discloses no reasonable claim.
The Defendant’s Application to Stay the Action – The defendant’s primary argument was that despite the amendment to seek a declaration under s. 172 of the BPCPA, the claim had not changed – and that this was really still a claim for private damages “cloaked” as a public interest claim as the material facts did not change (in other words, a strategy effort to avoid a stay).
Sections 171 and 172 of the BPCPA state in relevant part as follows:
“Damages recoverable
171(1) Subject to subsection (2), if a person, other than a person referred to in paragraphs (a) to (e), has suffered damage or loss due to a contravention of this Act or the regulations, the person who suffered damage or loss may bring an action against a
(a) supplier,
…
who engaged in or acquiesced in the contravention that caused the damage or loss.
(2) A person must not bring an action under this section if an application has been made, on the person’s behalf, to the court in respect of the same defendant and transaction under section 192 [compensation to consumers].
(3) The Provincial Court has jurisdiction for the purposes of this section, even though a contravention of this Act or the regulations may also constitute a libel or slander.
Court actions respecting consumer transactions
172 (1) The director or a person other than a supplier, whether or not the person bringing the action has a special interest or any interest under this Act or is affected by a consumer transaction that gives rise to the action, may bring an action in Supreme Court for one or both of the following:
(a) a declaration that an act or practice engaged in or about to be engaged in by a supplier in respect of a consumer transaction contravenes this Act or the regulations;
(b) an interim or permanent injunction restraining a supplier from contravening this Act or the regulations.
…
(3)If the court grants relief under subsection (1), the court may order one or more of the following:
(a) that the supplier restore to any person any money or other property or thing, in which the person has an interest, that may have been acquired because of a contravention of this Act or the regulations;
…
(c) that the supplier advertise to the public in a manner that will assure prompt and reasonable communication to consumers, and on terms or conditions that the court considers reasonable, particulars of any judgment, declaration, order or injunction granted against the supplier under this section.”
Both parties relied on the Supreme Court of Canada decision of Seidel v Telus Communications Inc., 2011 SCC 15 (“Seidel”), to interpret ss.171 and 172 of the BPCPA. Citing to Seidel, the Court here held that the s. 172 claim may be initiated by “virtually anyone” (“a person other than a supplier, whether or not the person bringing the action has a special interest or any interest under this Act or is affected by a consumer transaction that gives rise to the action”). This is important because “[o]pening the door to private enforcement in the public interest vastly increases the potential effectiveness of the Act.”
The Court emphasized the following passage from Seidel:
“[36] As to the statutory context, s. 172 stands out as a public interest remedy (i.e. it is available whether or not the self-appointed plaintiff “is affected by a consumer transaction that gives rise to the action”) as compared with s. 171 (where the plaintiff must be “the person who suffered damage or loss”). The difference in the personal stake (or lack of it) required of a plaintiff is scarcely accidental. Section 171 confers a private cause of action. Section 172 treats the plaintiff as a public interest plaintiff intended to shine a spotlight on allegations of shabby corporate conduct, and the legislative intent thereby manifested should be respected by the court. This appeal falls to be determined on the meaning of s. 172 of the BPCPA, not on general theories of the desirability of commercial arbitration.
[37] As to statutory purpose, the BPCPA is all about consumer protection. As such, its terms should be interpreted generously in favour of consumers: Smith v. Co-operators General Insurance Co., 2002 SCC 30, [2002] 2 S.C.R. 129, and ACS Public Sector Solutions Inc. v. Courthouse Technologies Ltd., 2005 BCCA 605, 48 B.C.L.R. (4th) 328. The policy objectives of s. 172 would not be well served by low-profile, private and confidential arbitrations where consumers of a particular product may have little opportunity to connect with other consumers who may share their experience and complaints and seek vindication through a well-publicized court action.” [Emphasis in original]
In the face of this authority, the defendant argued that the s. 172 claim should be stayed because the plaintiffs were pursuing “private” claims and there was no “public interest” component as they were not seeking to benefit “the world at large”. The defendant pointed out that the plaintiffs could have, but did not, bring the action as a class proceeding. Rather they were seeking damages for themselves personally – and that those claims were private damages claims that should be arbitrated.
While the plaintiffs conceded that the s. 171 claims were “private” and should be stayed, they relied on the decision in Williams v Amazon.com Inc., 2023 BCCA 314 to argue that their claims under s. 172 of the BPCPA, should survive. In that case, the court held that s. 172 of the BPCPA demonstrates a legislative intention to override the contractual freedom to choose arbitration. As a result, a party who can bring their claim within the rubric of s. 172 of the BPCPA can “extricate” themselves from an arbitration agreement.
The Court did not accept that the plaintiffs’ claims were “private” claims disguised as claims under s. 172 – they were entitled to seek the declarations and more limited financial remedies available under s. 172. There was nothing in the BPCPA to suggest that a plaintiff, or group of plaintiffs, is barred from seeking relief under s. 172 or that it requires a class proceeding.
The Defendant’s Motion to Strike the ANOCC– The defendant’s argument tracked closely its arguments on the stay motion – i.e. that this was a claim for damages under s. 171 and that s. 172 did not change anything. The Court rejected this argument by distinguishing between claims under s. 171 and s. 172: “The very nature of declaratory relief in the realm of consumer protection is at the heart of the BPCPA. S. 172 allows the plaintiffs to pursue declaratory relief as between the defendant and ‘the whole world’… Clearly, an arbitrator’s decision does not have that power.”
The test for striking a pleading requires the court to find that the claim is bound to fail. That was not so here. Any person reading the pleading would understand the factual underpinning of the claim and the legal basis upon which the relief was sought.
Contributor’s Notes:
This decision builds on the Supreme Court of Canada’s decision in Seidel and the British Columbia Court of Appeal’s decision in Williams. Absent legislative intervention, courts will generally defer to the commercial contracts parties have freely entered into and the dispute resolution clauses contained therein. However, s. 172 of the BPCPA is an example of where legislation restricts parties’ ability to arbitrate. Section 172 addresses the public policy concern that an arbitrator’s decision does not have the power to provide relief beyond the dispute between the parties. Further, a confidential arbitration decision does not advance the public interest.
Even where the facts underlying the relief sought under s.171 and s.172 are the same, a claim under s. 172 can still proceed in the face of an arbitration clause. However, the line seems blurry. Section 172(3) provides that the court may order “that the supplier restore to any person any money that the supplier may have acquired in contravention of the BPCPA”. Such an order would “restore” the plaintiffs tuition and fees effectively and allows a damages claim to be pursued through declaratory relief. If the Polanski plaintiffs are successful, they are likely to be receive a return of their tuition which may be the very same as their damages claimed in the arbitration. Perhaps that is why the defendant tried to argue this point in response to the last-minute amendment.