



COURT OF APPEAL FOR ONTARIO

CITATION:
Weller v. Reliance
    Home Comfort Limited Partnership, 2012

ONCA 360

DATE: 20120531

DOCKET: C53910

Rosenberg, Juriansz and Rouleau JJ.A.

BETWEEN

Scott Weller

Applicant (Appellant)

and

Reliance Home Comfort Limited Partnership

Respondent (Respondent)

Martin Teplitsky and Bradley Teplitsky,
    for the appellant

Barry Bresner and Brendan Wong, for the respondent

Heard: January 31, 2012

On appeal from the judgment of Justice George Strathy of
    the Superior Court of Justice dated May 24, 2011, with reasons reported at 2011
    ONSC 3148, 335 D.L.R. (4th) 690.

Rosenberg J.A.:

[1]

This appeal from the judgment of Strathy J. requires an interpretation
    of the
Consumer Protection Act, 2002
,
    S.O. 2002, c. 30, Sched. A (the Act)
, and a regulation to that
    Act,
General
, O. Reg. 17/05 (the Regulation). The principal issue is
    the right to amend the terms and conditions of an existing consumer contract,
    in this case, a contract for rental of a water heater. Although presented as a
    consumer protection issue, this particular application is part of an ongoing
    dispute between two competitors, the respondent Reliance Home Comfort Limited
    Partnership and National Energy Corporation (National). The application judge
    found that the proposed amendments to the contract comply with the applicable
    regulation and he dismissed the application. In the alternative, the
    application judge would have dismissed the application on the basis of s. 93(2)
    of the
Act,
which allows a
    court to order that a consumer be bound by a defective consumer agreement if it
    would be inequitable for the consumer not to be bound.

[2]

For the following reasons, I would dismiss the appeal.

THE FACTS

[3]

The appellant rents a water heater from the respondent pursuant to what
    the Act refers to as a remote agreement, being a consumer agreement entered
    into when the consumer and supplier are not present together: see the
Consumer
    Protection Act, 2002
, s. 20. The respondent wants to amend its agreement
    with the appellant. As the application judge pointed out, to understand this
    litigation it is necessary to refer to the history of litigation between the
    respondent and National or its proxies. It appears that National mounted a
    campaign to take customers from the respondent. National would have the
    customer sign a document appointing it as the customers agent to carry out the
    termination of the customers contract with the respondent. In response, the
    respondent instituted a policy requiring customers wishing to terminate their
    rental agreements to first telephone the respondent to obtain a Removal
    Reference Number. In this way, the respondent would have the opportunity to
    speak directly to its customer before the customer terminated the contract. A
    customer of the respondent and now a vice-president of National, Douglas
    MacGregor brought an application, at the behest of National, challenging this
    new policy. In 2010, Echlin J. held that MacGregor was entitled to appoint an
    agent to fulfill the contractual obligation of contacting the respondent. His
    reasons are reported at
MacGregor v. Reliance Home Comfort Ltd. Partnership
,
    2010 ONSC 6925. Echlin J. did, however, suggest that it would be open to the
    respondent to amend its contract.

[4]

The respondent attempted to do so and it is that attempt that led to
    this litigation. The appellant is married to a vice-president of Nationals
    parent company. In 2007, he purchased a home which contained a water heater
    owned by the respondent. The previous owner had terminated the agreement. The
    appellant received a package from the respondent that set out the terms and
    conditions and rates and methods of payments. The appellant has been paying the
    rental fees since that time. In February 2011, obviously in response to the
MacGregor
decision, the respondent attached the following notice to the appellants
    account:

Important Information About Your Water Heater Rental Agreement

The Terms & Conditions under which you rent your water
    heater will be amended to include the following paragraph as the last paragraph
    under the heading "Termination of the Rental Agreement": "Any
    return of your water heater must occur in accordance with the return processes
    and procedures as set by Reliance Home Comfort from time to time. Reliance Home
    Comfort may in its sole discretion refuse to deal with any agent or delegate
    you appoint to comply with any such processes and procedures." All of your
    other Terms & Conditions will remain unchanged except as otherwise
    provided. If you do not agree to this amendment, please call us at
    1-866-RELIANCE prior to this amendment taking effect in order to terminate your
    rental. If you do not respond to this notice, this amendment will take effect
    automatically on April 1, 2011.

[5]

The appellant then began the application at the behest of National. In
    his application he sought a declaration that the proposed amendment is invalid
    because it does not comply with the Regulation under the
Consumer
    Protection Act
.

THE ACT AND REGULATIONS

[6]

The Regulation governing amendments to rental agreements reads, in part,
    as follows:

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.

[7]

Section 93 of the
Consumer Protection Act
provides as follows:

(1)
    A consumer agreement is not binding on the consumer unless the agreement is
    made in accordance with this Act and the regulations.

(2) Despite
    subsection (1), a court may order that a consumer is bound by all or a portion
    or portions of a consumer agreement, even if the agreement has not been made in
    accordance with this Act or the regulations, if the court determines that it
    would be inequitable in the circumstances for the consumer not to be bound.

[8]

The original agreement between the appellant and respondent sets out the
    conditions under which the agreement may be terminated:

You may (so long as you are not in default under this
    agreement) terminate this agreement at any time. You agree to return the water
    heater to us in the same condition that it was delivered to you, normal wear
    and tear (reflecting its age, normal use and local water conditions and
    assuming that it has been maintained as required by this agreement) excepted.
    At your option, you may request us to remove the water heater or, at your own risk,
    have your own qualified contractor remove it ... If you choose to terminate
    this agreement or if we terminate this agreement because you have breached any
    term of this agreement, you will pay us our standard removal charges as
    follows: (i) our account closure charge (currently $200, if the water heater is
    one year old or less, or $40, if the water heater is over one year old, or $0
    if the water heater is over 10 years old) plus (ii) if we remove the water
    heater, our drain and disconnect charge (currently $125) or, if the water
    heater is drained and disconnected by your own qualified contractor ... our
    water heater pick-up charge (currently $65 for a gas water heater or $125 for
    an electric water heater). You will pay such charges when billed by us.

REASONS OF THE APPLICATION JUDGE

[9]

The application judge dealt with a number of arguments that have not
    been raised on this appeal. I will summarize only those parts of the reasons
    that respond to the issues raised on the appeal. The application judge held
    that as remedial legislation, the
Consumer Protection Act
must be
    given a broad and liberal interpretation to ensure the attainment of its
    objects. He considered that s. 42 of the Regulation seeks to achieve a
    fair balance between the interests of the supplier and the consumer. It does
    this by preventing a supplier from forcing an amendment on an unwilling
    consumer. The consumer must be given the right to either terminate the
    agreement or retain the existing agreement, unamended. The agreement in this
    case complies with this requirement because the agreement imposes reasonable
    terms and conditions to terminate the agreement, namely that the consumer not
    be in default and pay the suppliers standard removal charges. Otherwise,
    consumers could seize upon an inconsequential amendment to avoid their
    contractual obligations (at para. 41).

[10]

In any
    event, from the consumers point of view, the proposed amendment is innocuous.
    It imposes no additional burden on the consumer other than requiring the
    consumer to call the respondent to terminate the contract. In fact, the
    amendment may benefit consumers since it provides some counter-balance to the
    entreaties of the door-knockers (at para. 44). The protection of consumers
    is not advanced by the interpretation advanced by the appellant. The
    application judge also noted that this was really a dispute between two
    suppliers and not a real consumer protection dispute. For that reason, if he
    was wrong in holding that the proposed amendment and agreement complied with
    the Regulation, this was a case where s. 93(2) of the Act should be applied and
    the appellant bound by the proposed amendment. It would be inequitable in the
    circumstances for the appellant not to be bound by the amendment.

[11]

Given his
    findings, the application judge did not find it necessary to address the
    respondents argument that the application should be dismissed because it was
    launched for a collateral purpose.

THE POSITIONS OF THE PARTIES

[12]

The
    principal submission by the appellant is that the proposed amendment is invalid
    because it does not comply with s. 42(2)2 of the Regulation. That provision
    requires that an agreement cannot be amended unless the agreement gives the
    consumer the option to either terminate the agreement or retain the existing
    agreement unchanged. More specifically, since the agreement does not give the
    consumer the option to retain the existing agreement unchanged, the issue is
    whether it allows the consumer to terminate the agreement. The appellant
    submits that this must be an unconditional right to terminate; it is not open
    to the supplier to attach conditions or consequences, no matter how reasonable
    they might be.

[13]

As to s.
    93(2) of the Act, the appellant submits that s. 93(2) does not apply in this
    case because the appellant never said that he was not bound by the agreement,
    only the amended agreement. Alternatively, s. 93(2) should only apply to
    technical oversights, not a complete failure to comply with the Regulation.

[14]

The
    respondent supports the application judges reasons.  It submits that there is
    nothing in the Regulation requiring that the right to terminate be without any
    consequences. As to the application of s. 93(2), this is a discretionary
    decision and is entitled to substantial deference. In any event, it would
    plainly be inequitable to not require that the appellant be bound by the
    agreement and the proposed amendment.

ANALYSIS

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.

[17]

The
    agreement in this case attaches at least two conditions to the consumers
    ability to terminate the contract: (1) the consumer must not be in default
    under the agreement; and (2) the consumer must pay the standard removal
    charges. These conditions may well be reasonable but in the result the right to
    terminate is not unconditional. The agreement therefore does not comply with s.
    42 of the Regulation and was not binding on the consumer.

[18]

This
    holding, however, does not leave the supplier without remedies. Section 42(4)
    of the Regulation provides that any amendment does not retroactively affect
    rights and obligations acquired by the consumer before the effective date of
    the amendment. The supplier can still pursue the consumer in court for
    obligations previously incurred such as unpaid rental fees.

Application of s. 93(2) of the Act

[19]

However, I
    would not interfere with the application judges holding that this is a proper
    case to invoke the proviso in s. 93(2) of the Act. I agree with the application
    judge that s. 93(2) applies even though the appellant was not attempting to
    resile from the entire agreement, only the proposed amendment. There is nothing
    in s. 93 to so limit the reach of the provision. To the contrary, s. 93(2)
    refers to a court ordering that the consumer be bound by all or a portion or
    portions of a consumer agreement. This wording is broad enough to include a
    proposed amendment to the agreement. Similarly, there is nothing in s. 93(2)
    that limits its reach to technical oversights. The test for application of the
    proviso is not the nature of the defective compliance but whether it would be
    inequitable for the consumer not to be bound. Obviously, in deciding whether it
    would be inequitable, the court will take into account the nature of the
    non-compliance, and the more substantial the deviation from the legislative
    scheme the more likely it will be that the court will find it would not be
    inequitable for the consumer not to be bound to the agreement. I therefore turn
    to whether the application judge erred in finding that it would be inequitable
    for the appellant not to be bound to his agreement with the respondent.

[20]

Section
    93(2) involves the exercise of discretion and is entitled to deference on
    review by this court. The application judge held that it would be inequitable
    in the circumstances for the consumer not to be bound by the defective
    agreement. In reaching that conclusion, he took into account that no consumer,
    including the appellant, would be prejudiced by the proposed amendment and that
    the application had been brought for a collateral purpose. These were proper
    considerations and I can see no basis for interfering with the application
    judges disposition.

DISPOSITION

[21]

Accordingly,
    I would dismiss the appeal with costs fixed at $7,500 inclusive of
    disbursements and H.S.T.

Signed:        M. Rosenberg J.A.

I agree R. G. Juriansz J.A.

I agree Paul Rouleau J.A.

Released: MR May 31, 2012


