Supreme Court

Consumer Protection

Notification conveyed impression that appellant won grand prize

Appellant received “Official Sweepstakes Notification” supposedly signed by manager. Coloured boxes referred to Time magazine leading to inference it was sent by respondent Time.

Notification contained exclamatory sentences in bold uppercase letters to catch reader’s attention by suggesting he had won large cash prize. Sentences combined with conditional clauses in smaller print, some of which began with “If you have and return the Grand Prize winning entry in time”.

Contest conditions included requirement to validate entry by returning reply coupon which offered subscription to Time magazine. Appellant subscribed but did not receive prize.

When he contacted Time, he was informed that Notification merely invitation to participate and that alleged manager only “pen name”. Appellant filed motion to institute proceedings, alleging contraventions of ss. 219 and 228 of Consumer Protection Act (Que.).

Alleged violation of s. 219 lay in fact that Notification falsely stated appellant was winner, while alleged violation of s. 228 related to Time’s failure to reveal appellant might not be winner.

Quebec Superior Court allowed action in part, finding Notification contravened Act, setting value of appellant’s moral injuries at $1,000 and fixing punitive damages at $100,000. Time’s appeal allowed by Quebec Court of Appeal. Appeal to Supreme Court of Canada allowed in part.

Pursuant to Act, merchants, manufacturers and advertisers responsible for veracity of information they provide to consumers. Main objectives of Title II, “Business Practices”, to protect consumers from false or misleading representations. Section 218 provides that in determining whether representation constitutes prohibited practice, general impression it gives, and literal meaning of terms used to be taken into account.

“General impression” conveyed by representation must be analyzed in abstract, without considering personal attributes of consumer. Test is that of first impression. In case of false or misleading advertising, general impression is one a person has after initial contact with entire advertisement, and relates to both layout and meaning of words used.

In Quebec consumer law, “average consumer” means someone not particularly experienced at detecting falsehoods or subtleties in commercial representations. “Credulous and inexperienced” describe average consumer. “Credulous” reflects fact that average consumer prepared to trust merchants on basis of general impression conveyed by advertisements but does not suggest average consumer incapable of understanding literal meaning of words used if general layout does not render words unintelligible. Notification conveyed general impression that appellant won grand prize.

Even if no false statements, Notification riddled with misleading representations, contrary to s. 129. Nor were contest rules apparent, thereby violating s. 228.

Section 272 establishes scheme to sanction prohibited practices by means of civil proceedings instituted by consumers in accordance with principles governing application of Act and rules of general law. Legal interest depends on existence of contract to which Act applies. Consumer does not have to prove fraud; recourse based on premise that failure to fulfill obligation imposed by Act gives rise to absolute presumption of prejudice.

Prohibited practice must be one capable of influencing consumer’s behaviour with respect to formation, amendment or performance of contract.

When requirements met, court can conclude that prohibited practice deemed to have had fraudulent effect on consumer and contract so formed, amended or performed constitutes, in itself, prejudice suffered by consumer. Recourse in damages, whether contractual or extracontractual, not dependent on specific contractual remedies in s. 272. Claim for extracontractual compensatory damages available, since fraud committed during pre-contractual phase is civil fault that can give rise to extracontractual liability. Presumption means that consumer does not have to prove merchant intended to mislead. Appellant proved sufficient nexus between prohibited practices of Time and subscription contract.

Trial judge found appellant would not have subscribed to magazine had he not read misleading documentation. Notification deemed to have had fraudulent effect on appellant’s decision to subscribe. Time’s conduct constituted civil fault that triggered extracontractual liability.

Trial judge did not err in finding that Time’s fault caused moral injuries to appellant or in awarding appellant $1,000 for those injuries. Section 272 of Act establishes no criteria or rules for awarding punitive damages; such damages must be awarded in accordance with Civil Code of Quebec and must have preventive objective. Court must consider whole of merchant’s conduct.

Punitive damages justified but not in amount of $100,000. Trial judge erred in considering Charter of French language (Que.), and patrimonial situation of Time when assessing punitive damages. Award of $15,000 was sufficient.

Time inc. v. Richard

(Feb. 28, 2012, S.C.C., McLachlin C.J.C., LeBel, Deschamps, Fish, Abella, Charron and Cromwell JJ., File No. 33554) Decision at 187 A.C.W.S. (3d) 86 was reversed in part. 211 A.C.W.S (3d) 321 (121 pp.).

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