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Contracts can't stop class actions in B.C., top court says

Telus has a history of rewarding shareholders with dividend growth, according to Yield Hog panelist Tony Demarin of BCV Asset Management.

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The Supreme Court of Canada ruled Friday that a B.C. woman has the right to launch a class-action lawsuit against her cellphone provider - even though her mobile-service contract waived her right to sue.

The decision is seen as victory for consumers in B.C., giving them the right to file class actions against companies they accuse of deceptive business practices, even when the fine print of their contracts says disputes must be settled by private arbitration.

The ruling, released on Friday, is a defeat for Vancouver-based Telus Corp. , which had argued that the class-action - launched over how it charges for air time - should be stayed.

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In Ontario, Quebec and Alberta, laws already override arbitration clauses that forbid class-action lawsuits. But in B.C., the law was murky - until now. It was unclear whether the decision would have any affect in other provinces.

In a narrow 5-4 split decision, the Supreme Court said that B.C.'s consumer-protection legislation "should be interpreted generously in favour of consumers," and found that a section of the B.C. law overrides arbitration clauses in consumer contracts, allowing class actions.

But the court's dissenting minority said the question of whether arbitration clauses should be set aside to allow class actions was for provincial legislatures, not the courts, to decide.

"Absent a clear statement by the legislature of an intention to the contrary, a consumer claim that could potentially proceed either by way of arbitration or class action must first be submitted to arbitration," the court's minority writes.

Michelle Seidel, who lives in Vancouver, signed up for cellphone service with Telus in 2000. In 2005, she was the main plaintiff in a potential class-action lawsuit filed against Telus over the way the company charged for cellphone time.

Telus charges for incoming calls before cellphone customers actually answer their phones. Ms. Seidel argued this ran contrary to her contract and was against the law. Her lawsuit argued that consumers should only be charged for the actual airtime they use.

In 2009, the B.C. Court of Appeal sided with Telus's attempt to have the class action put on hold. Ms. Seidel appealed that ruling to the Supreme Court of Canada.

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Ms. Seidel's lawyers, Arthur Grant and Bruce Lemer of Grant Kovacs Norell in Vancouver, argued that the case was about the right of consumers to seek justice "in an era where an increasing part of their everyday lives is controlled by large corporate interests."

In their written argument submitted to the Supreme Court, they argued that arbitration clauses were used to keep consumer complaints at bay: "The drafters of these contracts insert these arbitration clauses for the purpose of blocking any real access to justice."

In an interview, Shawn Hall, a spokesman for Telus, said the company's contracts are designed to make things easy for customers: "Our intention is to always make things as easy as possible for our customers. This is a highly competitive business."

He pointed out that Ms. Seidel's lawsuit has yet to be certified, or given the go-ahead from a judge, as a class action. And he said Telus would continue to defend itself.

"In our view, the suit has no merit," Mr. Hall said, arguing that it is impossible not to bill for the time it takes to connect a call.

He added that most customers do not end up paying anything extra, since most do not use up all of the air time allowed under their cellphone plans.

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"For most of our customers, this is a non-issue," Mr, Hall said. "A few seconds of set-up time, when they use their plan, isn't going to affect them. Our plans are generous."

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About the Author
Toronto City Hall Reporter

Jeff Gray is The Globe and Mail’s Toronto City Hall reporter. He has worked at The Globe since 1998. He spent six years as the law reporter in The Globe’s Report on Business, covering Bay Street law firms and writing about fraud, insider trading and corporate tax avoidance. More

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